Wondering if it makes sense to refinance your mortgage? Check out the refinance calculator below to determine the potential savings (or lack thereof).
Believe it or not, it doesn’t always make sense to a refinance a home loan, even if mortgage interest rates are stellar. One must consider the cost to refinance, along with the expected tenure in the property.
If you plan on staying put in the home for life, you still must determine if the loan is a keeper long term or just for a little while.
Let this calculator do the heavy lifting so you don’t have to. It’s probably better that you do the calculations as opposed to an interested party, who only gets paid when you refinance!
Should You Refinance Your Mortgage?
Enter your current loan details and a proposed new rate to see your monthly savings, breakeven point, and lifetime interest impact.
- Current loan balance is what you owe today — check your most recent mortgage statement.
- Remaining term is how many years are left on your current loan (e.g. if you got a 30-yr loan 5 years ago, enter 25).
- Closing costs typically run 2–5% of the loan amount. Your lender can provide a Loan Estimate.
- Breakeven point is how many months until your cumulative monthly savings offset the closing costs. If you plan to stay past breakeven, refinancing likely makes sense.
- Results are estimates. Consult a licensed mortgage professional before making any decision.
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This calculator is for informational and educational purposes only and does not constitute financial, legal, or tax advice. Results are estimates and may not reflect actual loan terms or outcomes. Please consult a licensed mortgage or financial professional before making any financial decisions.
How to Use the Refinance Calculator
To start, enter your original loan amount when you first took out your current mortgage, followed by your remaining loan balance (might need to check your loan servicer’s website for that).
Next enter the remaining loan term, current mortgage rate, and original loan term, which are important to determine the potential savings, and the closing costs on the refinance loan.
For example, a 30-year fixed mortgage has an original term of 30 years or 360 months. And if your original mortgage was for $400,000, enter that number, followed by what the outstanding balance is today.
Then enter the proposed new interest rate on the refinance, the new loan term, and the estimated closing costs (and if they’re being paid out-of-pocket or rolled into the loan amount).
The section below that details the proposed refinance loan, including how long you plan to keep the new loan (important!) any cash out you’d like to take out on top of your existing loan balance (optional).
If you aren’t paying any mortgage points or closing costs, simply enter 0. This might be the case if it’s a no closing cost refinance where all costs are absorbed via a slightly higher interest rate thanks to a lender credit.
And if you’re simply refinancing your mortgage into another 30-year mortgage, keep the default 30-year setting. If you want to refinance into a shorter-term loan, such as a 15-year fixed, you’d enter 15 years.
I didn’t include any tax bracket and savings rate information because I wanted to keep this calculator somewhat “simple,” even though it’s still pretty robust as is.
It’s important to enter a ballpark figure for how long you plan to keep the property or the home loan itself. Simply put, the less time you keep your lower-rate mortgage, the less the savings will be. After all, the savings grow each month you pay less money on your mortgage payment.
Once calculated, you will see the monthly payment savings and lifetime interest savings (if applicable) via the lower interest rate, along with the break-even period, which is when upfront closing costs are recouped via lower mortgage payments. It’s essentially how long you need to stay in the loan to actually save money.
Note that if you have a 30-year fixed and take out a new 30-year fixed when refinancing, you could actually more interest across the two loans, even if you save on payments. This is because you’ve extended the loan term in the process.
You can also see the full loan amortization schedule for more details on monthly payments and composition of principal and interest on the refinance loan.
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