Home Page www.decisionaide.com Calculators Menu of Calculators

Refinancing Two FRMs Into One to Lower Net Cost (3b)

Who This Calculator is For: Borrowers with two FRMs trying to decide whether
refinancing into one or two new FRMs will reduce their costs.

What This Calculator Does:This calculator compares the total cost of retaining two
existing FRMs with the cost of refinancing into one or two new FRMs,
over a specified future period. It also shows the break-even period for both cases.

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
  Refinance Each Loan or Consolidate Both Into One 1st Mortgage
Information About Your Current Loans Current 1st Current 2nd
  Loan Balance  
  Interest Rate on Loan  (e.g. 7.50)
  Remaining Term ( in months )
  Monthly Mortgage Insurance Payment (e.g. 96.75)  
Information About Available New Loans New 1st New 2nd
  Loan Balance(s) ( Same as Current Loans - May Include Financed Costs )
  Interest Rate on Loan  (e.g. 7.50)
  Term ( in months )
  Monthly Mortgage Insurance Payment   
  Points  ( Dollar Amount or Percent of Loan )
  All Other Closing Costs (e.g. 2250)
  Points and Costs Are:     Paid in Cash     Financed


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) 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. In after-tax cost comparisons, this figure is adjusted to an after-tax basis. Since this program only allows you to refinance a loan for an amount equal to the existing loan, you cannot change the amount of the new loan. To change this loan amount you must change the amount of the current loan. To perform a "pre-tax" analysis select "Pre-Tax" from the drop down list. Estimate all closing costs other than points and enter your estimate for each loan here. For further information, read "How to Shop Settlement Costs". (Click on link at bottom of page) 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. The mortgage insurance premiums on the new loans are calculated automatically. If you enter a value, mortgage insurance will be terminated when the loan balance equals 80% of the appreciated value of the property.