Money Saved Refinance Calculator
'/%3E%3Ccircle cx='48' cy='39' r='19' fill='%23f2c9a5'/%3E%3Cpath d='M27 35c3-16 39-17 42 2-8-8-27-9-42-2z' fill='%23374151'/%3E%3Cpath d='M21 86c5-24 49-28 56 0z' fill='%232563eb'/%3E%3Ccircle cx='41' cy='41' r='2' fill='%23111827'/%3E%3Ccircle cx='55' cy='41' r='2' fill='%23111827'/%3E%3Cpath d='M42 52c4 3 9 3 13 0' stroke='%2392400e' stroke-width='3' fill='none' stroke-linecap='round'/%3E%3C/svg%3E)
Reviewed by Calculator Editorial Team
Refinancing your mortgage can save you thousands of dollars over the life of your loan. Use our Money Saved Refinance Calculator to determine exactly how much you could save by switching to a new mortgage rate or term.
How the Money Saved Refinance Calculator Works
The Money Saved Refinance Calculator compares the cost of your current mortgage with the potential cost of a new mortgage. It calculates the difference in interest payments and total loan costs over the life of the loan.
Key Formulas
Monthly Payment: P = L × [r(1 + r)^n] / [(1 + r)^n - 1]
Total Interest Paid: Total Interest = (Monthly Payment × n) - L
Money Saved: Money Saved = (Current Total Interest) - (New Total Interest)
Where:
- P = Monthly payment
- L = Loan amount
- r = Monthly interest rate (annual rate / 12)
- n = Number of payments (loan term in years × 12)
The calculator uses these formulas to determine how much you'll pay in interest over the life of your loan with your current mortgage versus a potential new mortgage. The difference between these two amounts is what you could save by refinancing.
How to Use the Calculator
- Enter your current loan amount in the "Current Loan Amount" field.
- Enter your current interest rate in the "Current Interest Rate" field.
- Enter the term of your current loan in years in the "Current Loan Term" field.
- Enter your new interest rate in the "New Interest Rate" field.
- Enter the term of your new loan in years in the "New Loan Term" field.
- Click the "Calculate" button to see your potential savings.
Note: This calculator assumes you're refinancing the full amount of your current loan. If you're only refinancing part of your loan, the savings will be less.
Example Calculation
Let's say you have a $200,000 mortgage with a 5% interest rate and a 30-year term. You're considering refinancing to a 4% interest rate with a 15-year term.
| Scenario | Monthly Payment | Total Interest Paid | Total Cost of Loan |
|---|---|---|---|
| Current Mortgage | $1,264.14 | $214,692.00 | $414,692.00 |
| New Mortgage | $1,626.14 | $108,920.00 | $308,920.00 |
In this example, refinancing would save you $105,772.00 over the life of the loan. However, you would pay $361.00 more per month.
Considerations: Before refinancing, weigh the trade-off between paying more per month and saving thousands over the life of the loan. Also consider closing costs and other factors that may affect your decision.
Frequently Asked Questions
How accurate is the Money Saved Refinance Calculator?
The calculator provides an estimate based on the information you provide. For precise figures, consult with a mortgage professional who can factor in your specific situation and local market conditions.
What factors should I consider before refinancing?
Consider your current interest rate, credit score, closing costs, and how long you plan to stay in your home. Also think about whether you'll benefit more from paying down your principal or extending your loan term.
How often should I check my refinance options?
Mortgage rates fluctuate, so it's a good idea to review your refinance options at least once a year or when you notice significant changes in interest rates.
Can I refinance if I have bad credit?
Yes, but you may need to look for specialized lenders or programs designed for borrowers with lower credit scores. These options may have higher interest rates or require larger down payments.