Return on Equity Calculator

[Clayton Smith]

Hi, 

I am looking for a calculator or formula. 

I am hoping to find a calculator that considers the delta of the monthly payment pre refi and post refi to determine what ROI I will need to get on the money pulled out to determine if it is time or I should wait. And since this is for a refi and not sale I need it to factor in the LTV amount and closing costs to determine how much I will actually recieve and the closing costs. I am assuming I will only be able to get a loan for 80% LTV.

For my real life example. I have a great interest rate at 3.25% 30 year fixed on the original loan. Average cash flow currently $223 a month. Using the standard ROE it comes to 7.2%. Not bad but I can beat that. 

Current ARV $165,000

Current loan bal $118,071.91

Current P&I payment $517.26

Assuming I can get a loan 80% LTV loan at 5% rate with a 30 year am.

After pulling out some equity and assume $3,820 in closing cost I will get a check for $10,108.09 and it will add an additional $191.34 to my monthly payment. 

I am not considering cash flow just striktly the difference in the old payment and new payment. It will take me 53 months to equal the cash out check. But considering it actually cost $13,928.09 to recieve $10,108.09 I will need my ROI will need to equal total cost. Using the rate function in excel I will need to make 134.72% total ROI over the 53 months to "breakeven" with an annual rate of 30.6% per year.

When I calculate the ROI I am more or less considering the increase in payment as negative amount every month to get my number. Since it is costing me money every month.

Is my math / thinking correct? 

Any comments would be appreciated.