Unexpectedly Intriguing!
June 26, 2006

Harrison Loke of the Finandom blog recently wrote about some simple formulas that you can use to decide if refinancing a loan makes sense for you. We here at Political Calculations are always on the lookout for interesting math that we can turn into tools, so we've chosen to take on some of Harrison's formulas as our latest project!

First up, how long will it take for you break-even on the refinancing charges that you will have to pay? The following formula may be used to provide the answer:

The formula above may be used to find the number of months that it will take to at least cover the cost of refinancing. But, the formula makes two assumptions that may or may not be true in your case:

  1. You are making monthly payments on your existing loan.
  2. You will be making monthly payments after refinancing.

What if you went from a monthly to a biweekly payment period? Or vice versa? Or making payments at some other interval? The tool below takes the most common payment intervals into account in determining the number of months it will take to break-even after refinancing your loan:

Current Payment Information
Input Data Values
Installment Payment
Frequency of Payments
Refinancing Information
Installment Payment
Frequency of Payments
Refinancing Charges

Time to Break-Even After Refinancing
Calculated Results Values
Number of Months to Break-Even

For the tool above, a negative result indicates that you will not at least recover the costs of refinancing.

Why This Might Be Important

The amount of time that it takes to make back the amount of money it cost to refinance your loan is an important factor to consider if you may be retiring the loan in the near future. In the case of a mortgage, for example, if you will be selling your home and moving before breaking even on refinancing - or in the case of a car loan, if you will be trading it in for a newer model.

Labels: ,

About Political Calculations

blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts


This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.