Fontenot MortgageOdette Fontenot · Mortgage broker
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The loans

The maths

Odette

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Owning

When does a refinance pay for itself?

A refinance is worth doing when you will still own the loan on the day it has paid for itself. That day has a date, and it is the only number that decides this.

Illustrative only. Every figure is computed in your browser from what you type. Nothing here is a quote, an offer of credit, an APR or a rate lock, and no result is stored or sent anywhere.

The loan you have

8.35%

A non-QM rate from a purchase two years ago is the usual starting point here.

324

The loan you are considering

6.85%

Lender fees, title, appraisal, recording, prepaids. Ask for the figure in dollars, not as a percentage.

7 yr

Break-even

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Payment now
$0
Payment after
$0
Monthly change
$0
New loan amount
$0

The verdict, for the time you are staying

Cumulative position, month by month

Saved so farWhat it cost

Where the solid line crosses the dashed one is the break-even. Before that point the refinance has cost you money.

Over the whole life of both loans

Interest left on the current loan
$0
Interest on the new loan
$0
Lifetime difference
$0

The assumptions, stated.

  • Break-even is costs divided by the monthly saving. It ignores what you could earn on the money if you did not spend it, which matters at larger cost figures.
  • Taxes and insurance are excluded from both payments, since they do not change when you refinance.
  • Extending the term lowers the payment and usually raises lifetime interest. Both numbers are shown because both are true.
  • Prepayment penalties on the loan being paid off are not modelled. On a non-QM loan, check for one before you do anything else.

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—The other seven

The next step

Numbers are a start. A file is a conversation.

If the calculator says something you did not expect, that is usually worth ten minutes on the phone rather than another hour of typing.

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