calculating loan payback

[lil_acorn]

We are considering refinancing but the closing fees are >$2k. How do you figure out payback if you are decreasing the term of your loan (i.e. from 20 to 15 years)? Obviously over the life you are saving since you shortened the term, but I'm trying to figure out how to calculate payback on my closing costs. Do I just look at cumulative interest saved per month?

[larig]

ETA: I found an all-in-one. linked from this article (http://www.dinksfinance.com/2010/07/how-to-know-if-refinancing-is-worth-it/)
http://www.dinkytown.net/java/MortgageRefinance.html
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Use a loan amortization calculator like this one.
http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

run it for each scenario and see how much interest accumulates over the life of the loan. If you want to figure out how long until you make back the difference, then run it twice (once for each scenario) and go down the interst column in the chart until you see the difference between the two is $2000.

there's probably a loan amortization calculator that does that for you, but I didn't google long enough to find one. pretty easy to do with the one I posted anyway.

[KrisM]

Use a loan amortization calculator like this one.
http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

run it for each scenario and see how much interest accumulates over the life of the loan. If you want to figure out how long until you make back the difference, then run it twice (once for each scenario) and go down the interst column in the chart until you see the difference between the two is $2000.

there's probably a loan amortization calculator that does that for you, but I didn't google long enough to find one. pretty easy to do with the one I posted anyway.

That's what I'd do, but also if you itemize your taxes, then you need to take that into account, too. So, if old loan is at $10,000 interest and new is $8000, then that's the $2k difference. But, if you're at 15% taxes, then you 'save' $1500 of the old and only $1200 of the new, so the real difference is only $1700, not $2,000.

[lil_acorn]

If you want to figure out how long until you make back the difference, then run it twice (once for each scenario) and go down the interst column in the chart until you see the difference between the two is $2000.



YES - this is what I was thinking - just the delta in interest until you get to $2k

[KrisM]

Or try this calculator: http://www.dinkytown.net/java/MortgageRefinance.html

[larig]

YES - this is what I was thinking - just the delta in interest until you get to $2k

:loveeyes: I'm swooning over your use of delta!!

[larig]

Or try this calculator: http://www.dinkytown.net/java/MortgageRefinance.html
:yeahthat:
that's the one I just found too.

[lil_acorn]

Or try this calculator: http://www.dinkytown.net/java/MortgageRefinance.html

great calculator!!! thank you!

[tabegle]

:loveeyes: I'm swooning over your use of delta!!

:yeahthat: