Supplementary Materials for
Optimal Mortgage Refinancing:
A Closed-Form Solution
Sumit Agarwal, John Driscoll, David Laibson
Please visit the NBER web page for the associated research paper:
Working Paper 13487
Instructions for using refinance calculator:
- This worksheet calculates how far interest rates need to fall before
you should refinance an old fixed-rate mortgage with a new fixed-rate mortgage.
- Begin by filling in the boxes under the heading "Basic
values already appear in these boxes. You should enter the numbers that apply to
your own mortgage.
- Next, you can revise the information under the heading "Advanced Parameters."
However, most mortgage holders should not adjust these parameters since
they are already set appropriately.
- When you are done, press Calculate at the bottom
of the page. Your answer will appear after the screen refreshes.
DISCLAIMER: This calculator describes the solution to a mathematical
problem that is related to but not equivalent to a realistic mortgage
refinancing decision. We make no warranty about the calculator's
accuracy, performance, or value as a source of practical advice. Use
entirely at your own risk. The calculator is not endorsed by the
National Bureau of Economic Research, the Federal Reserve Bank of
Chicago, the Federal Reserve Board, or Harvard University.
Appendix of Refinance Advice