Introduction
A refinance means you replace your old home loan with a new one. People do this to get a lower interest rate, a smaller monthly payment, a shorter loan, or cash from their home's value. But refinancing is not free. You pay closing costs. So the real question is simple: will the money you save be more than the money you spend?
This refinance mortgage calculator answers that question. Put in your current loan balance, your rate, and how much time is left. Then add your new loan term and rate. You can pick the best available rate, today's national average, or type in a rate a lender quoted you.
The calculator shows your new monthly payment, how much you save each month and each year, and your break-even point. The break-even point is how long it takes for your savings to pay back your closing costs. If you plan to move before that point, refinancing may cost you money instead of saving it.
You can also add discount points, a cash-out amount, your property tax, and your home insurance. Your ZIP code helps estimate tax and insurance costs, and you can change those numbers to match your real bills. Charts show your loan balance over time, and a step-by-step section shows the math behind every result.
How to Use Our Refinance Mortgage Calculator
Enter your current mortgage details, your new loan offer, and your closing costs. The refinance calculator then shows your new monthly payment, your monthly and lifetime savings, your break-even point, a loan comparison table, charts, and the full math behind the answer.
How would you like to describe your current loan? Pick "I know my remaining balance" if you know what you still owe. Pick "I know my original loan details" and the calculator will work out your balance for you.
Remaining Loan Balance: Type how much you still owe on your mortgage today.
Remaining Term (Years): Type the whole years left on your loan, from 0 to 30.
Remaining Term (Months): Type the extra months left after those years, from 0 to 11.
Original Loan Amount: Type the amount you first borrowed when you bought the home.
Original Loan Term: Choose the length of your first loan: 10, 15, 20, or 30 years.
Year Mortgage Began: Type the year your loan started. It must be a past year within the last 30 years.
Current Interest Rate: Type the yearly rate you pay now, like 6.875%.
New Loan Term: Choose how many years your new refinance loan will run.
New Interest Rate: Tap one of the three tiles. Use the best available rate, the national average rate, or "Enter My Own Rate" to use a rate a lender quoted you.
Your Rate: If you chose your own rate, type it here.
This is a cash-out refinance: Check this box only if you want cash back from your home equity.
Estimated Property Value: Type what your home is worth now. It must be more than your loan balance.
Cash-Out Amount: Type how much cash you want to take out. The calculator shows your top limit at 80% loan-to-value.
Credit Score Range: Pick your score band. This gives rate context and does not change your entered rate.
ZIP Code: Type your 5-digit ZIP code so we can estimate your property tax and home insurance.
How do you want to enter closing costs? Choose a percentage of the new loan or a flat dollar amount.
Closing Costs (% of new loan): Type a percent. Most refinance closing costs run 2% to 5%.
Closing Costs (flat amount): Type the total dollar cost of lender fees, title, appraisal, and escrow.
Discount Points: Type 0 to 4 points. Each point costs 1% of the loan and cuts your rate by about 0.25%.
Annual Property Tax: Keep our estimate or type your real yearly tax bill.
Annual Homeowners Insurance: Keep our estimate or type your real yearly premium.
How Long Do You Plan to Stay? Type the years you will stay in the home, from 1 to 30. This tells you if you will reach break-even before you move.
Click Calculate to see your results. Click Reset to start over with the default values.
What Is a Mortgage Refinance?
Refinancing means you replace your current home loan with a new one. The new loan pays off the old loan. You then make payments on the new loan instead. People refinance to get a lower interest rate, a smaller monthly payment, a shorter loan, or cash from their home's value.
Why People Refinance
- Lower rate: If rates dropped since you bought, a new rate can cut your payment and your total interest.
- Shorter term: Moving from 30 years to 15 years raises the monthly payment but saves a lot of interest.
- Lower payment: Stretching the loan back out to 30 years lowers the monthly bill, but you pay more interest over time.
- Cash-out: You borrow more than you owe and keep the difference in cash. Most lenders let you borrow up to 80% of your home's value.
Closing Costs and Break-Even
A refinance is not free. Closing costs usually run 2% to 5% of the loan. They cover lender fees, title work, an appraisal, recording fees, and escrow setup. You can also pay discount points. One point costs 1% of the loan and cuts your rate by about 0.25%.
The break-even point is how long it takes for your monthly savings to pay back those costs. Divide your total closing costs by your monthly savings. If costs are $8,000 and you save $200 a month, you break even in 40 months. If you plan to move before then, the refinance likely loses you money.
What Goes Into Your Monthly Payment
Your full housing payment is called PITI: principal, interest, taxes, and insurance. Refinancing only changes the principal and interest part. Property tax and homeowners insurance stay about the same, since they are tied to your home, not your loan. Tax rates and insurance costs change a lot by state and ZIP code. If you put less than 20% down originally, a PMI Calculator shows the extra premium a refinance might remove.
Things to Watch Out For
Starting a new 30-year loan resets the clock. Even with a lower rate, you can pay more interest in total because you are paying for more years. A cash-out refinance also raises your balance, so your payment may go up. Lenders will also look at your DTI ratio when they approve you. And your credit score matters: a higher score usually earns a lower rate, while a lower score can add 1% or more to your rate.
Simple Refinance Rules of Thumb
- Refinancing often makes sense if you can drop your rate by about 0.5% to 1% or more.
- Make sure you will stay in the home longer than your break-even point.
- Compare total loan cost, not just the monthly payment.
- Get quotes from more than one lender, since fees and rates differ.