Mortgage Refinance Calculator, break even is wrong or what?

**hollandia** · 04-17-2010, 05:22 PM

Hi,
I'm using a mortgage refinance calculator (one of the many calculators that you can find on the net) but something isn't really clear for me.

As I can read on the net this is how to calculate break even period:
How to calculate break-even period
The Refinance Mortgage Calculator (Refinance Break-even Calculator) figures out the break-even period, which is the minimum time period for which you should stay in your property so as to recover the closing costs.

Here's an example which explains how to calculate break-even period.

Let's say you have taken a mortgage worth $100,000 for 15 years. Your monthly payment at 8% interest rate is $955. Now, if you're refinancing at 6.5% for next 15 years, then your monthly payment (according to free Refinance Calculator) will be = $871.

So, you can save $ 955 - $871 = $84 on a monthly basis.

Now, the closing costs for refinancing = $1200

Break-even period = ($1200/$84) = nearly 14 months

If I enter this values on a mortgage refinance calculator it give me 10 months to break even and not 14 months.
Where is the error? How can I calculate the 10 months and what is the 14 months?

Please help.