|Loan Balance Difference in 7 Years, Less Income Tax Shift:||$45,226.67|
|Less Additional Monthly Payments:||-$9,043.81|
|Less Total Closing Costs:||-$3,526.36|
| Total Refinancing Benefit Over Next 7 Years
Loan Balance Savings + Monetary Savings - Total Closing Costs:
The following tables offer a detailed breakdown of the calculated results in the above table.
|Balance & Closing||
|Balance at Refinance:||$232,635.89||$232,635.89|
|Cost of Purchasing 1.000 Discount Point:||$2,326.36|
|Other Closing Costs:||$1,200.00|
|Total Closing Costs||$3,526.36|
|Monthly Payments||Before Refinancing||After Refinancing|
|Payment Savings Per Month:||$-107.66|
|7 Yr Totals||Before Refinancing||After Refinancing|
|Total Monthly Payments Over 7 Years:||$125,905.61||$134,949.42|
|Monthly Payment Savings:||$-9,043.81|
|Total Interests Paid:||$90,968.32||$39,278.53|
|Income Tax Info||Before Refinancing||After Refinancing|
|Tax Saving Losses:||$15,506.94|
Are You Itemizing Your Income Tax Deductions?
In 2020 the standard deduction for single filers & married filing separately is $12,400. Head of households can deduct $18,650 whie married joint filers can deduct $24,800. With the higher deductions initially introduced by the 2017 TCJA few filers itemize income tax deductions. If you do not plan on itemizing set your marginal tax rate to zero to remove it's impact on your calculation.
|Final Loan Balance||Before Refinancing||After Refinancing|
|Loan Balance at Sale in 7 Years:||$197,698.60||$136,964.99|
|Remaining Loan Balance Difference at Sale:||$60,733.61|
Deciding whether or not you should refinance your home mortgage depends upon several factors. It also depends upon whether you are looking to simply reduce your monthly payment or if you are hoping to save money in the long run.
To understand better, let's look at an example. If your original 30 years loan was for $250000.00 with a 3.250% interest, and you have already paid on it for 60 months, it will increase your monthly payment if you refinance for a new 15 years period but with a 3.000% interest rate.
If your Federal tax rate is 25.000% and your state tax rate is 5.000%, you were probably paying $1,498.88 per month toward your home. When you refinance at the new rate, you will pay $1,606.54 instead, but your tax benefits will also be affected by this change.
The bottom line is:
Summing up these numbers, we can figure out your total refinancing BENEFIT, which will be $32,656.50.