I'm looking at refinancing my $290,000 mortgage (present is 30 yr fix, and with 26 yrs left) from 5.0% to 3.875% with no fees. I'm trying to figure out the lifetime savings.
I believe this change in interest rate comes out to an effective $200 monthly savings. Please correct me if I'm wrong.
I used a couple refinance online calculators (e.g. zillow) and say a lifetime savings of about $5000. But if I use mortgage calculators and look at the amortization schedule, it looks like the saving is large than that (e.g. total interest paid is app 270,000 v 201,000). And I would probably just put the $200 back on the mortgage.
The only think i can think of is that refinance calculators are taking into account the present value of the interest savings.
Am I missing something in my calculations? Why is there a difference between the interested paid via the amortization schedule versus total interest saving that a refinance calculator (such as zillow's or bankrate's) returns.