Refinance interest only LoanFunding only of interest loans
What is more, I am not afraid of the interest penalty. Unfortunately, it turns out to be very tricky as we have a five year variable interest mortgages that only pays interest for the first 10 years. Neither of the funding computers I found offers you the possibility to take into account either the ARM or pure interest clause when calculating the break-even point.
Is there a calculator that takes into consideration the ARM and the waived capital when funding a fixed-rate ARM? Things get even worst when you realise that the break-even point is not a very useful monetary figure either. Breake-even considers the reduction in payments compared to closure cost. When the refinance cuts your $250 per month profit and you have $5,000 in acquisition fees, the breakeven point is 20 month ($5,000/250 = 20).
It' useful, but not something you want to lean back to imitate when you decide if it makes sence to refinance your trickiest 5/1 interest rate ARM. The majority of house owners are in one interest - only ARM for one of two purposes. They can either not pay for the mortgages if they include a capital payback element, or they have something better to do with the cash that would have gone towards capital repayments.
Is there anything better to do with your cash than pay your loan in advance? Assuming yes, a better way to analyze a funding is to look at the overall interest rate estimates, opportunities associated with the payment of acquisition fees for the new loan, and return on investments associated with the non-prepayment of the loan.
You can find the nearest funding calculator to all this on The Mortgage Professor's website. While it does not deal with the pure question of interest rates, it does deal with almost everything else. A further good option is the pocket calculator available on the CCH Financial Planning Toolkit website. What does it make to refinance for you?