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Refinancing One FRM Into Two to Lower Net Cost (3c)

Who This Calculator is For: Borrowers trying to decide
whether refinancing one FRM into two FRMs will lower costs.

What This Calculator Does:This calculator compares the total cost of an existing
first mortgage on which the borrower may pay mortgage insurance
with that of a combination 80% first mortgage plus a second mortgage at a higher
rate, over a specified future period. It also shows the highest rate you can pay
on the second to break even.

Information About You and Your House
  Expected Years in House, Cannot Exceed Term
  Rate of Interest on Savings  (e.g. 3.5)
  Income Tax Bracket ( e.g. 27 )
  Value of House When Current First Mortgage Was Taken Out
  Current Value of House (e.g. 225000)
  Optional:  Expected Rate of Property Value Appreciation
Information About Your Existing First Mortgage
  Loan Balance  
  Interest Rate on Loan  (e.g. 7.50)
  Remaining Term ( in months )
  Monthly Mortgage Insurance Payment ( if applicable )
Information About New Loans 80% First Second
  Loan Balance  ( Calculated Automatically )
  Interest Rate on Loan  (e.g. 7.50)
  Points  ( Dollar Amount or Percent of Loan )
  All Other Closing Costs  ( Dollar Amount or Percent of Loan )
  Points and Costs Are:     Paid in Cash     Financed in the 2nd


This is your marginal tax rate, the rate at which each additional dollar of income will be taxed. If you pay only Federal income taxes, it is the highest tax bracket you used when you calculated your taxes. Federal tax brackets currently are: 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, these marginal rates can be added to the Federal rate. For example, if you had to pay 25% to the IRS and 5% to the state of Pennsylvania, your tax bracket is 30%. To perform a "pre-tax" analysis enter zero (0) as the tax rate. The period cannot exceed the shortest mortgage term. The period may be stated in fractions. For example, 25 years and 1 month would be entered as 25.083, 25 years and two months would be 25.167, and 25 years and 3 months would be 25.25, etc. All settlement costs that might differ between any two deals. This includes all lender fees of any sort, and all third party fees (such as title insurance, apprraisals and credit report), but excluding charges of governments which cannot vary from one deal to another. Do not include escrow reserves for taxes and insurance, or prepaid (per diem) interest. If you have not made any extra payments on your loan, this is the original term less the number of monthly payments that have been made. If you have made any extra payments, you can find the period remaining by clicking here and entering your current balance, rate, and monthly payment. Make sure the payment is principal and interest only. (hover over yellow icon to make this pop-up disappear) The balance of the first is calculated automatically as 80% of Current Value of House. The number calculated automatically for the second is the existing loan balance less the balance of the new first. If points and costs are financed, all financed points and costs will be added to the second loan. This is the interest rate you could earn on the monies you spend during the period you are in your home. For most people, it would be the interest rate on a bank account or a money market fund. This is required only if your are now paying mortgage insurance. If you are paying mortgage insurance, we need to know the value of your house when the current loan was taken out so that we can figure out when the insurance payment will stop. We assume it stops when the balance reaches 78% of original value. This is required only if you are now paying mortgage insurance. If you enter a value, mortgage insurance will be terminated when the loan balance equals 80% of the appreciated value of the property.