Refinance Calculator
See if refinancing your mortgage makes financial sense for you.
Current Loan
New Loan
You'll recover closing costs in 18 months and save money long-term.
For informational purposes only. Refinance break-even and lifetime savings estimates assume you keep the new loan for its full term and that the rate and costs you entered are accurate. Closing costs, lender fees, appraisal costs, title insurance, and prepaid items vary by lender and are often higher than the percentage used here. Whether refinancing makes sense depends on your remaining term, how long you plan to stay in the home, your equity, and your existing loan terms (including any prepayment penalties). Consult a licensed mortgage professional before refinancing.
When to Consider Refinancing
Refinancing replaces your existing mortgage with a new one, ideally with better terms. Here are the most common reasons homeowners refinance:
- Lower Interest Rate: If current rates are at least 0.5-1% lower than your existing rate, refinancing can reduce your monthly payment and total interest.
- Change Loan Term: Switch from a 30-year to a 15-year to pay off faster and save on total interest, or extend to a 30-year to lower monthly payments.
- Cash Out: Tap into your home equity for major expenses like home improvements, debt consolidation, or education. Available when you have 20%+ equity.
- Remove PMI: If your home value has increased enough that you have 20%+ equity, refinancing can eliminate private mortgage insurance.
- Remove FHA MIP: Refinance from an FHA loan into a conventional loan to drop the lifetime mortgage insurance premium.
Costs to Consider
Refinancing is not free — understanding the costs helps you decide if it's worth it:
- Closing Costs: Typically 2-5% of the loan amount, covering appraisal, origination, title insurance, and lender fees. On a $300,000 refinance, expect $6,000-$15,000.
- Break-Even Point: The number of months until your monthly savings equal the closing costs. If you plan to sell before break-even, refinancing costs you money.
- Reset the Clock: Starting a new 30-year loan means paying interest for another full term. If you're 5 years into a 30-year, refinancing into another 30-year adds 5 years of total payments.
- Prepayment Penalties: Check if your current lender charges fees for early payoff. Most modern loans do not, but it's worth confirming.
How to Use This Calculator
- Enter your current loan balance (remaining principal on your existing mortgage).
- Enter your current interest rate and remaining loan term.
- Enter the new interest rate you're being offered and the new loan term.
- Enter estimated closing costs (or use the default 2-5% estimate).
- Review the break-even point, monthly savings, and lifetime cost comparison.
The calculator shows you exactly when refinancing pays for itself and how much you save or pay over the life of the loan. If you're within 2-3 years of your break-even point, refinancing is usually worth it.
Refinance Scenarios That Make Sense
- Rate-and-Term Refinance: Lower your rate or change the loan term without taking cash out. Best for reducing monthly payments or total interest.
- Cash-Out Refinance: Borrow more than you owe and take the difference in cash. Use for home renovations, debt consolidation, or other major expenses. Requires 20%+ equity.
- Streamline Refinance: FHA, VA, and USDA loans offer simplified refinancing with less paperwork and no appraisal requirement.
- Recast: Not a refinance, but making a large principal payment and asking the lender to re-amortize. Lowers monthly payment without closing costs or a new loan.
For a detailed comparison, see our guides on Refinance vs Home Equity Loan and HELOC vs Home Equity Loan.
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Frequently Asked Questions
When does refinancing make sense?
Refinancing generally makes sense when (1) your new rate is at least 0.50-1.00% lower than your existing rate, (2) you plan to stay in the home long enough to recover closing costs (typically 2-5 years), and (3) you are not extending the loan term unless you have a strategic reason. Use our calculator to model the break-even month and lifetime savings.
How much do closing costs run on a refinance?
Refinance closing costs typically run 2-5% of the loan amount. On a $300,000 refinance, expect $6,000-$15,000 in closing costs including appraisal, origination, title, and lender fees. Some lenders offer no-closing-cost refinances in exchange for a slightly higher rate.
What is the break-even point?
The break-even point is the number of months it takes for your monthly payment savings to equal the closing costs. After that month, you are net-positive. If you sell or refinance again before break-even, you have lost money on the transaction.