Refinance Break-Even Tables

The following 6 pieces of information are required to generate a Break Even table.
1. Your Income Tax Rate: This is the tax rate you pay on your last dollar of income. If you pay only Federal income taxes, it is the highest of the Federal tax brackets you used. Currently, these brackets are 10%, 15%, 25%, 28%, 33%, and 35%. If you also pay state and/or local income taxes, you should add the highest bracket you used in connection with these taxes. For example, if your highest Federal tax bracket is 25% and the highest state bracket is 5%, you should enter 30%.
2. Remaining Term on Your Existing Loan: This is the number of months until the balance is paid off if you continue making the mortgage payments you are making now. It is the original term less the number of months that have expired since origination, provided a) you have a fixed-rate mortgage, and b) you have not made any extra payments. If one or both of these conditions does not hold, or if you do not know how many months remain on your existing loan, use the Remaining Term calculator below to find your remaining term.
3. Term on New Loan: For borrowers looking for a fixed-rate mortgage (FRM), a 15-year term is the best bet if you can afford the payment. Most borrowers who take adjustable rate mortgages (ARMs) opt for 30-years, tho 40-year terms are available.
4. Points: Enter the points paid to obtain the loan (0 if no points paid). Points should be entered as a per cent of the loan amount (e.g. 1.25 points = 1 1/4 per cent of the loan amount)
5. Whether Points and Other Costs Are Paid in Cash or Financed: Finance the costs if you must, but doing so will extend the break-even period. In some cases, having to finance the costs could swing the refinance from profitable to unprofitable.
6. Pre-Tax Savings Rate: This is the rate of interest you would earn on readily available funds which could be used to pay your mortgage.
To Generate Your Break-Even Table, Enter the Following:
  Income Tax Bracket (e.g. 27)
  Remaining Term on Existing Loan (in months)
  Term on New Loan
  Points (as a % of loan amount)
  Points and Costs are:     
  Pre-Tax Savings Rate


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