To determine whether or not to refinance your home, find the "break-even point". Take these five
steps for a "quick and dirty" refinance analysis:
1. Add all costs - Points, fees, attorney's fees, loan origination fees, extra insurance, appraisals,
inspections, recording, and survey fees' title insurance, credit reports, etc.
2. Determine the monthly savings - Subtract the current payment from the amount due with a refinanced loan.
If the current payment is $3,000 and the refinanced amount is $2,750, the monthly savings is $250.
3. Multiply - Take the monthly savings and multiply by the federal and state tax rate.
4. Subtract - Take this cost (3) from the monthly savings to arrive at net monthly savings.
5. Divide - Total cost by the net monthly savings to find the number of months it will take to break event
(pay off the cost of refinancing)
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