Maybe it’s not an apples to apples comparison, as you say in the error window, but it’s a real world example.A Mortgage refinancing lets you save money and also to tap equity. With a higher loan amount, the borrower doesn’t save as much on the new monthly mortgage payment, so there is less to invest. Thus, the new loan amount is always higher than the balance of the current mortgage. They all want to roll those costs into the loan. Of course, the borrower could elect to pay these pre-paid costs out of pocket at closing, but NOBODY ever does that. The new loan amount may be $360,000, depending on the day of the month the loan closes, when property taxes are due, and when the homeowners insurance policy renews. When a person refinances their house and they currently owe say 357,000, the new loan amount will always be higher (even if it’s a no cost loan) because the lender has to collect pre-paid interest, property taxes, and homeowner’s insurance. However, I wish it allowed a different value for the “possible loan” vs the “current loan”. I’m a mortgage loan officer and I use it frequently. THANK YOU FOR YOUR WORK – WELL DONE! Reply If the difference in the payments is invested, you will have an estimated gain of $121,883 from the additional investment income.īottom line? Your total net SAVINGS will be $133,265. Now, since the payments are LESS under the proposed refinancing than it is under the current financing, you could invest this difference. However, the interest savings will increase your taxes by $0 due to the lost deduction. So considering just the differences between the two loans: after tax considerations, and other related closing costs you will SAVE $11,382 (NOT A BIG DEAL, BUT POSSIBLE CLARIFICATION …IF YOU TAKE POSSIBLE REFINANCE LOAN). The cost for the possible financing includes $3,800 in miscellaneous closing costs. The possible refinancing will cost you $119,072 (reduced by a $37,962 tax benefit). Your current financing will cost you $130,454 (reduced by a $42,960 tax benefit). The amounts used in this analysis are discounted to today’s dollars (adjusted for inflation). I have made some notes in all caps for your considerationīy the time you sell after 26 years (LITTLE CONFUSED SINCE I USED 30 YEARS AS SALES DATE, IT APPARENTLY STOPPED COUNTING AT END OF MY LOAN PERIOD), you’ll have paid down $373,348 under your current loan, or $386,999 under the possible refinancing. Well done, thank you for making a complicated subject easier. Even though the prepayment penalty is associated with the current loan, it's a cost you have to pay to obtain the new financing. Prepayment Penalty for Current Loan - If the CURRENT loan has a prepayment clause that requires you to pay a fee if you pay the loan off early, enter the fee here.Miscellaneous Closing Costs - Some loans, typically mortgages, have additional fees and closing costs.mortgage, the lender may require that you pay "point" to receive the lowest possible interest rate. Loan Origination Points - If the new loan is a U.S.Expected Payment Frequency - The payment frequency for the potential loan.After you review the "Results," you may click back to the financing tabs, and you'll be able to see the payment amount the calculator used if you had the calculator calculate the amount. If you prefer entering a payment amount, you may do so by checking the option. New Payment Amount - If you uncheck the checkbox, the calculator will calculate the new payment amount.Anticipated Annual Interest Rate - New interest rate.Number of Payments Due - The term for the new loan.This amount can be different than the current loan balance. New Loan Amount - New projected loan amount.Possible Lender (optional) - Name of the potential new lender for a printed report.