| Your Savings | Amount |
|---|---|
| Loan Balance Difference in 7 Years, Less Income Tax Shift: | $57,646.21 |
| Less Additional Monthly Payments: | -$31,281.79 |
| Less Total Closing Costs: | -$4,212.21 |
| Total Refinancing Benefit Over Next 7 Years Loan Balance Savings + Monetary Savings - Total Closing Costs: |
$22,152.21 |
The following tables offer a detailed breakdown of the calculated results in the above table.
| Balance & Closing |
|
|
|---|---|---|
| Balance at Refinance: | $301,221.09 | $301,221.09 |
| Cost of Purchasing 1.000 Discount Point: | $3,012.21 | |
| Other Closing Costs: | $1,200.00 | |
| Total Closing Costs | $4,212.21 |
| Monthly Payments | Before Refinancing | After Refinancing |
|---|---|---|
| Monthly Payment: | $2,128.97 | $2,501.37 |
| Payment Savings Per Month: | $-372.40 |
| 7 Yr Totals | Before Refinancing | After Refinancing |
|---|---|---|
| Total Monthly Payments Over 7 Years: | $178,833.31 | $210,115.10 |
| Monthly Payment Savings: | $-31,281.79 | |
| Total Interests Paid: | $138,674.43 | $101,010.98 |
| Interest Savings: | $37,663.45 |
| Income Tax Info | Before Refinancing | After Refinancing |
|---|---|---|
| Tax Savings: | $41,602.33 | $30,303.29 |
| Tax Saving Losses: | $11,299.04 |
Are You Itemizing Your Income Tax Deductions?
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.
In 2024 the standard deduction for individuals or married people filing individually is $14,600. The standard deduction for a head of household is $21,900 & the standard deduction for married couples filing jointly is $29,200. This means for there to be tax savings from your mortgage interest payments you will need the above to combine with other deductions (like charitable giving or state, local & property taxes) to exceed these limits. Further, the combined limit on deducting property taxes with state income or sales tax is set to $10,000 per year.
| Final Loan Balance | Before Refinancing | After Refinancing |
|---|---|---|
| Refinance amount: | $301,221.09 | |
| Loan Balance at Sale in 7 Years: | $261,062.21 | $192,116.96 |
| Remaining Loan Balance Difference at Sale: | $68,945.25 | |
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 $320000.00 with a 6.000% 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 5.750% interest rate.
If your Federal tax rate is 25.000% and your state tax rate is 5.000%, you were probably paying $2,128.97 per month toward your home. When you refinance at the new rate, you will pay $2,501.37 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 $22,152.21.
