Mortgage Refinance Calculator
Calculate your potential savings from refinancing your mortgage. See your break-even point, monthly savings, and total savings over the life of the loan.
Current Mortgage
New Loan Terms
Refinance Costs
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Important Disclaimer
Not Financial Advice: This calculator provides estimates for educational and informational purposes only.
- Results are based on the information you provide
- Actual results may vary based on individual circumstances
- Consult a qualified professional before making financial decisions
How Refinancing Works
Refinancing replaces your current mortgage with a new loan, typically to secure a lower interest rate, reduce monthly payments, or change the loan term. The key to a successful refinance is ensuring that the savings outweigh the closing costs.
When to Refinance
- •Interest rates drop 0.5-1% or more
- •You plan to stay in your home past break-even
- •Your credit score has improved significantly
- •You want to switch from ARM to fixed rate
Understanding Break-Even
- •Break-even is when savings = closing costs
- •Under 2 years is considered excellent
- •Over 5 years may not be worth it
- •Consider your plans: moving, selling, etc.
🌳 When to Refinance: Decision Tree
Follow this decision tree to determine if refinancing makes sense for your situation. Answer each question honestly to find your path.
Is the new interest rate at least 0.5% lower than your current rate?
Great! Continue to Step 2 →
Decision: Wait
The rate difference is too small. Refinancing likely won't save you enough to cover closing costs. Monitor rates and reconsider when rates drop further.
Do you plan to stay in your home for at least 2-3 more years?
Good! Continue to Step 3 →
Decision: Probably Not Worth It
You may not stay long enough to reach break-even. If you're selling soon, skip refinancing. If uncertain, calculate your exact break-even point first.
Can you afford closing costs ($2,000-$6,000) or roll them into the loan?
Excellent! Continue to Step 4 →
Decision: Not Right Now
Build up your savings first. Refinancing requires upfront costs that you'll need to pay or add to your loan balance.
Is your credit score 620 or higher (ideally 740+)?
Perfect! Continue to Step 5 →
Decision: Improve Credit First
Work on improving your credit score for 6-12 months. A higher score will qualify you for better rates and make refinancing more worthwhile.
Do you have at least 20% equity in your home?
Great! Continue to Final Decision →
Still Possible, But...
You may need to pay PMI (private mortgage insurance) on the new loan, which reduces your savings. Calculate if the numbers still work. Continue to Final Decision →
Final Decision: Should You Refinance?
- You answered YES to steps 1, 2, 3, 4, and 5
- Your break-even point is under 24 months
- Total lifetime savings exceed $10,000
- You're comfortable with the new loan terms
✨ Action: Get quotes from 3-5 lenders and compare offers. Use this calculator to verify the numbers!
- You're uncertain about staying in your home long-term
- Your break-even point is 24-36 months
- You have less than 20% equity (PMI required)
- You're switching from 30-year to 15-year (higher payments)
⚠️ Action: Calculate exact break-even point and total savings. Shop around for low closing costs.
- Rate difference is less than 0.5%
- You're selling your home within 1-2 years
- You can't afford closing costs
- Your credit score is below 620
- Break-even point exceeds 5 years
🚫 Action: Wait for better conditions. Monitor interest rates and improve credit score if needed.
💡 Pro Tip: Use the calculator above to input your actual numbers and see your personalized break-even point, monthly savings, and total lifetime savings. These concrete numbers will help you make the right decision for your unique situation.
Frequently Asked Questions
When should I refinance my mortgage?
Generally, refinancing makes sense when you can lower your interest rate by at least 0.5-1%, you plan to stay in your home beyond the break-even point, and the total savings outweigh closing costs. Use this calculator to see if the numbers work in your favor.
How much does it cost to refinance?
Typical closing costs range from $2,000 to $6,000, or 2-5% of the loan amount. This includes appraisal fees, title insurance, origination fees, and other costs. You can often roll these costs into your new loan, though this will increase your loan balance.
What is the break-even point?
The break-even point is when your monthly savings equal the closing costs you paid to refinance. For example, if closing costs are $4,000 and you save $200/month, you'll break even in 20 months. After that, all savings go directly to your benefit.
Should I refinance to a shorter term?
Refinancing to a shorter term (like 15 years instead of 30) typically comes with a lower interest rate and helps you pay off your mortgage faster. However, monthly payments will be higher. It's a good move if you can afford the higher payment and want to save significantly on interest.
Can I refinance if I have an FHA loan?
Yes, you can refinance an FHA loan. Options include FHA Streamline Refinance (quick and easy), cash-out refinance, or refinancing to a conventional loan. If your home equity is above 20%, refinancing to conventional can eliminate mortgage insurance premiums.
What credit score do I need to refinance?
Most lenders require a minimum credit score of 620 for conventional refinancing, though better rates are available with scores of 740+. FHA refinancing may accept scores as low as 580. Check with multiple lenders as requirements vary.
Should I pay points to lower my rate?
Paying points (1 point = 1% of loan amount) can lower your interest rate by about 0.25% per point. This makes sense if you plan to keep the loan long enough to recoup the cost. Calculate your break-even carefully, including both closing costs and points.
What is cash-out refinancing?
Cash-out refinancing lets you borrow more than you owe and take the difference in cash. This is useful for home improvements, debt consolidation, or major expenses. However, it increases your loan balance and may come with slightly higher rates than rate-and-term refinancing.
Partner Spotlight
Evaluating refinance offers? Explore PaydownWise for payoff and income tools that help validate your new loan terms.