Should You Refinance Home Mortgage (US)?

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Evaluate if refinancing your home mortgage is worth it using Eva’s missed investment value method, factoring in penalties, legal fees for true financial impact.

Last update Dec 2024
  • Scenario 1: Cost of Refinancing Mortgage
  • Scenario 2: Cost of Keeping Current Mortg.
  • Which One Is Higher (%)

Compare refinancing vs. keeping your mortgage by the missed investment value of payments, adjusted for tax-deductible interest (up to $750K balance). This approach highlights lost growth potential and the tax impact for US homeowners.

# Years from Now
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The remaining balance on your current mortgage. Mortgage interest is tax-deductible up to $750,000 in the US.

A =

The interest rate on your existing mortgage.

B =

The number of years left on your current mortgage term.

C =

The interest rate you are being offered for the new mortgage.

D =

The length of the new mortgage term, typically reset to 30 years for refinanced mortgages in the US.

E =

The penalty cost for breaking your current mortgage, if applicable.

F =

The estimated legal and administrative costs for refinancing.

G =

Any additional costs associated with refinancing.

H =

Your marginal income tax rate. Used to calculate the tax-deductible impact of mortgage interest payments.

I =
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Time Value Assumptions

Heads Up!

If you're using Cost Basis (cb) for calculating capital gains:

Please be aware that very few countries currently use inflation-indexed cost basis. Double-check your local tax rules before publishing.

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How is Cash Value calculated?

This scenario evaluates the total cost of refinancing, factoring in penalties, legal fees, and other costs. It calculates the missed investment value of the new payment schedule and adjusts for tax-deductible interest. The result shows whether refinancing provides financial benefits or hidden costs.

Decisions / Expectations

(Expressions are evaluated at Year 0 only.)

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Calculations

(Expressions are evaluated at every year.)

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