Mortgage Refinance Calculator
Compare your current mortgage with refinancing options to see if you could save money.
Current Mortgage Details
New Loan Details
Refinance Analysis
New Monthly Payment:
Monthly Savings:
Break-Even Point:
Total Savings Over Stay Duration:
Total Interest Before Refinancing:
Total Interest After Refinancing:
Life of Loan Interest Savings:
About Our Mortgage Refinance Calculator
Our Mortgage Refinance Calculator helps homeowners determine whether refinancing their current mortgage makes financial sense. By comparing your existing loan with potential refinancing options, you can make informed decisions about your home financing strategy.
Understanding Mortgage Refinancing
Mortgage refinancing involves replacing your current home loan with a new one, typically to secure better terms such as a lower interest rate, a different loan term, or to cash out home equity. While refinancing can potentially save you money, it's important to consider all costs involved and determine if the long-term benefits outweigh the immediate expenses.
Common Reasons to Refinance
- Lower Interest Rate: Securing a reduced rate to save on monthly payments and total interest paid.
- Change Loan Term: Shortening the loan term to pay off the mortgage faster or extending it to reduce monthly payments.
- Switch Loan Type: Converting between fixed-rate and adjustable-rate mortgages based on market conditions and financial needs.
- Cash Out Equity: Accessing home equity for major expenses like renovations, education, or debt consolidation.
- Remove PMI: Eliminating private mortgage insurance if you've built sufficient equity.
Key Features:
- Compare current and potential new mortgage terms side-by-side
- Calculate monthly payment savings with refinancing
- Determine break-even point accounting for closing costs
- Project total savings over your planned stay in the home
- Compare total interest paid between current and refinanced loans
- Receive personalized recommendations based on your specific situation
How to Use:
- Enter details about your current mortgage (balance, rate, term, time paid)
- Input information about the new loan (rate, term, closing costs)
- Specify any cash-out amount if applicable
- Indicate how long you plan to stay in your home
- Click "Calculate Refinance Benefits" to see your results
Understanding Your Results
Monthly Savings: The difference between your current and new monthly payments.
Break-Even Point: The number of months it will take for your monthly savings to cover the closing costs of refinancing.
Total Savings Over Stay Duration: The net amount saved during your planned stay, factoring in closing costs.
Life of Loan Interest Savings: The difference in total interest paid between your current loan and the refinanced loan over their full terms.
Important Considerations for Refinancing
- Closing Costs: Refinancing typically involves closing costs ranging from 2-5% of the loan amount, which impacts your break-even point.
- Home Equity: Having at least 20% equity in your home often secures better refinancing terms.
- Credit Score: A higher credit score generally qualifies you for better interest rates.
- Debt-to-Income Ratio: Lenders typically prefer a DTI ratio under 43% for refinancing approval.
- Length of Stay: Refinancing makes more sense if you plan to stay in your home beyond the break-even point.
Our refinance calculator helps you make data-driven decisions about your mortgage, potentially saving you thousands of dollars over the life of your loan. Remember that market conditions, lender criteria, and personal financial situations vary, so consider consulting with a mortgage professional before making final decisions.
Frequently Asked Questions
When is the best time to refinance my mortgage?
The best time to refinance depends on several factors, including interest rate trends, your current rate, home equity, and how long you plan to stay in your home. Generally, refinancing makes sense when you can lower your interest rate by at least 0.5-1 percentage point, when you've built significant equity, when your credit score has improved substantially since your original mortgage, or when you need to adjust your loan term. Using our calculator can help determine if current conditions make refinancing worthwhile for your specific situation.
How do closing costs affect my refinance savings?
Closing costs typically range from 2% to 5% of your loan amount and directly impact how long it takes to reach your break-even point. These costs may include application fees, appraisal fees, title insurance, lender fees, and more. Our calculator factors in your closing costs to calculate the break-even point—the number of months it will take for your monthly savings to cover these upfront expenses. If you plan to move or sell your home before reaching this point, refinancing might not be financially beneficial despite the lower interest rate.
Should I choose a shorter term when refinancing?
Refinancing to a shorter term (e.g., from a 30-year to a 15-year mortgage) can save you significant interest over the life of the loan and help you build equity faster. However, this typically results in higher monthly payments despite the lower interest rate. This strategy works best if you can comfortably afford the increased payments and plan to stay in your home long-term. Our calculator can show you the impact of different term lengths on your monthly payments and total interest paid, helping you find the right balance between monthly affordability and long-term savings.
Is cash-out refinancing a good idea?
Cash-out refinancing allows you to borrow against your home equity, providing funds for major expenses like home improvements, education, or debt consolidation. While this can be a cost-effective way to access large sums of money (typically with lower interest rates than personal loans or credit cards), it increases your mortgage balance and potentially extends your loan term. This strategy should be used carefully, ideally for expenses that provide long-term value or financial benefit. Our calculator helps you understand how a cash-out amount affects your new loan, monthly payments, and break-even point.