Refi Benefit Analysis
Should you refinance? There are many reasons you might want to do so. If you want to pull cash out, to change the terms of your loan (i.e. from adjustable to fixed-rate) or if your primary goal is lower payments and you aren’t concerned about how long it will take to pay off your loan, this calculator is not the best tool for you.
However, if you are considering refinancing to save money over time, you should know if it is actually going to do that. Traditional ways of analyzing that can be misleading, as you'll see. This calculator will help you determine exactly how much a proposed loan and your existing loan will cost over a given number of years, and compare them. It's easy to use with just a few simple inputs, and it will give you insight no other online calculator will. We'd love to hear your comments and feedback in the comment section below.
| Simple Payback Analysis |
|---|
| The payback analysis is the most common way to see if it makes sense for you to refinance. It’s flawed, however, because it doesn’t account for the fact that you are re-starting your payoff and that less of your payment will go to principal. Since other lenders will show you this, however, we’ll show it to you, too, and then look deeper. |
| |
| New Loan Type |
| year amortization |
| You currently pay |
$ | per month in principal and interest |
| You will be paying |
$ | per month in principal and interest |
| For monthly savings of |
$ | |
|
| |
| Payback Analysis |
|
|---|
| You will recoup your costs in |
months |
| Results |
|
| Total Cost Over Your Holding Period |
|---|
| This analysis recognizes that you may keep the loan for less than its full term. You might sell your home, refinance, or win the lottery and pay it off. If so, you only care about how much your proposed and existing loans will cost you for as long as you intend to keep it. The total costs include any fees you will be charged in escrow plus the interest for however long you tell us |
| Your current loan will cost you |
$ | in interest over the holding period |
| The proposed loan will cost you |
$ | in interest plus loan costs |
| Results: |
$ | |
|
| |
|
| |
| Balance at end of holding period |
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| If you refinance you may owe more money than you do now, and you may extend your payoff because you are starting over on paying off your loan. This analysis compares your total savings to how much more (or less) you will owe at the end of your holding period. |
| Your current loan will have a balance of |
$ | |
| Your proposed loan will have a balance of |
$ | |
| (You may owe more on your loan if you refinance) |
| Results |
You will owe $ | |
|
| |
|
$ | |
| If you do invest that money into savings, your net refi benefit would be |
$ | |
| Amortization Comparison / Money-Saving Strategies |
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| This automatically calculates the payment you would have to make each month to do this. Your proposed payment thus calculated will be higher than your new proposed minimum payment, but probably lower than your current payment. |
| Your current loan will be paid off in |
| years. |
| To pay your proposed loan off in the same time you must pay |
$ | per month |
| Discounted Net Present Cost of Alternatives |
|---|
| The geeks among us will recognize that all of these analyses ignore the time value of money. We have an app for that. This analysis accounts for the real cost to you in today's dollars, of both your existing and proposed financing. Included in this analysis are the up-front costs, interest over the holding period, and difference in the principal balance at the end of the holding period, all expressed in the value of today's dollars. |
| Net Present Cost of your current loan(s) over holding period |
$ | |
| Net Present Cost of your proposed loan over holding period |
$ | |
| (Recognizes the time value of money by discounting at a safe rate) |
| Results: Proposed loan costs | $ | |
|
| |
This analysis does not tell you whether you should or should not refinance, but gives you the data you need to make the best possible decision for yourself. If it looks like you will save money by refinancing (or if you want to refinance for a different reason, or just to discuss your situation), contact us for a no-cost consultation.
Terms of Use: In consideration of the use of this analysis you agree that neither Casey Fleming nor C2 Financial Corporation make any guarantee or representation that you can acquire a loan for the terms and costs analyzed herein. If you have applied for a loan, loan approval is not guaranteed and is subject to lender review of information. Your loan is only approved when the lender has issued an approval in writing and all underwriting conditions have been met. Specified rates may not be available for all borrowers. Rates and costs are subject to change due to market conditions, can and do vary as much as several times per day, and you may or may not qualify for the proposed loan, even if the rates are available. You further agree that you are fully and completely responsible for the decisions you make based on the information provided in this analysis. This analysis is merely a tool to help guide you in your decisions. C2 Financial Corporation is an equal opportunity lender, and is licensed by the State of CA.
© Casey Fleming, 2019
