🔄 Mortgage Refinance Calculator
Calculate refinance savings and break-even analysis
Current Mortgage
New Mortgage
Optional - closing costs for refinancing (typically 2-5% of loan amount)
How to Use This Calculator
Enter Current Mortgage Details
Input your current mortgage balance, interest rate, and remaining loan term.
Enter New Mortgage Details
Input the new interest rate and loan term you're considering for refinancing.
Enter Closing Costs (Optional)
Optionally include closing costs to calculate the break-even point and net savings.
Review Refinance Analysis
See monthly savings, break-even point, interest savings, and whether refinancing makes financial sense.
Formula
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where: P = Principal, r = Monthly Rate, n = Number of Payments
Monthly Savings = Current Payment - New Payment
Break-Even = Closing Costs / Monthly Savings
Net Savings = Interest Savings - Closing Costs
Example: Refinance from 5.5% to 4.5%
Current Balance: $250,000
Current Rate: 5.5%, Remaining Term: 25 years
Current Payment: $1,555.18/month
New Rate: 4.5%, New Term: 30 years
New Payment: $1,266.71/month
Monthly Savings: $288.47
Closing Costs: $5,000
Break-Even: 17.3 months (1.4 years)
Interest Savings: $50,000+
About Mortgage Refinance Calculator
The Mortgage Refinance Calculator is an essential tool for homeowners considering refinancing their mortgage. Refinancing involves replacing your current mortgage with a new loan, typically to secure a lower interest rate, reduce monthly payments, change loan terms, or access home equity. This calculator helps you evaluate whether refinancing makes financial sense by comparing your current mortgage to potential refinance options and calculating savings, break-even points, and total costs.
Refinancing can be a smart financial move when interest rates have dropped, you want to shorten your loan term, or you need to lower your monthly payments. However, refinancing comes with closing costs (typically 2-5% of the loan amount), which can include origination fees, appraisal fees, title insurance, and other expenses. This calculator helps you determine the break-even point - how long it takes for your monthly savings to equal the closing costs - so you can decide if refinancing is worth it.
This calculator compares your current mortgage payment and total interest to a new refinanced mortgage, showing you monthly savings, interest savings, break-even point, and net savings after closing costs. Understanding these numbers helps you make informed decisions about whether to refinance, when to refinance, and which refinance option is best for your financial situation. The calculator is particularly useful when interest rates drop, when you want to change loan terms, or when you're evaluating multiple refinance offers.
When to Use This Calculator
- Refinance Evaluation: Determine if refinancing makes financial sense
- Rate Drop Analysis: Evaluate refinancing when interest rates drop
- Term Change: Compare refinancing to different loan terms
- Break-Even Analysis: Calculate how long to recover closing costs
- Loan Comparison: Compare multiple refinance offers
- Financial Planning: Plan refinancing strategies
Why Use Our Calculator?
- ✅ Complete Analysis: Compare current vs. new mortgage
- ✅ Break-Even Calculation: Determine when refinancing pays off
- ✅ Savings Visualization: See monthly and total savings
- ✅ Free Tool: No registration or fees required
- ✅ Informed Decisions: Make better refinance decisions
- ✅ Mobile Friendly: Calculate on any device
Understanding Mortgage Refinancing
Mortgage refinancing involves replacing your current mortgage with a new loan, typically to secure better terms. The most common reasons to refinance include: (1) Lowering interest rate to reduce monthly payments and total interest, (2) Shortening loan term to pay off mortgage faster, (3) Switching from adjustable-rate to fixed-rate mortgage, (4) Accessing home equity through cash-out refinance, or (5) Removing PMI by refinancing when you have sufficient equity.
Refinancing comes with closing costs, which typically range from 2-5% of the loan amount. These costs include origination fees, appraisal fees, title insurance, recording fees, and other expenses. The break-even point is when your monthly savings equal the closing costs - if you plan to stay in the home past the break-even point, refinancing typically makes financial sense. If you plan to move before the break-even point, refinancing may not be worth it unless you're refinancing for other reasons (like accessing equity or changing loan terms).
Real-World Applications
Rate Drop Refinance: A homeowner has a $300,000 balance at 6.5% with 25 years remaining. They can refinance to 4.5% for 30 years, saving $300/month. With $6,000 closing costs, break-even is 20 months. Since they plan to stay 10+ years, refinancing saves $30,000+ in interest.
Term Shortening: A homeowner refinances from 30-year to 15-year mortgage. Their payment increases by $400/month, but they save $100,000+ in interest and pay off the mortgage 15 years earlier.
PMI Removal: A homeowner originally had 10% down but now has 25% equity. Refinancing removes PMI, saving $200/month, and they get a lower rate, saving an additional $150/month.
Important Considerations
- Refinancing resets your loan term - consider if extending the term is worth it
- Closing costs typically range from 2-5% of the loan amount
- Break-even point is when monthly savings equal closing costs
- Consider how long you plan to stay in the home when evaluating refinancing
- Refinancing may reset prepayment penalties if your current loan has them
- Compare multiple lenders to get the best refinance terms and lowest closing costs
Frequently Asked Questions
When should I refinance my mortgage?
Consider refinancing when: (1) Interest rates have dropped significantly (typically 0.5-1% or more), (2) You plan to stay in the home past the break-even point, (3) You want to change loan terms (e.g., 30-year to 15-year), (4) You want to remove PMI, or (5) You need to access home equity. Refinancing makes sense if the savings outweigh the closing costs.
What is the break-even point for refinancing?
The break-even point is the number of months it takes for your monthly savings from refinancing to equal the closing costs. For example, if closing costs are $5,000 and you save $250/month, the break-even point is 20 months. If you plan to stay in the home past the break-even point, refinancing typically makes financial sense.
How much are closing costs for refinancing?
Closing costs for refinancing typically range from 2-5% of the loan amount. For a $300,000 loan, closing costs might be $6,000-$15,000. Costs include origination fees, appraisal fees, title insurance, recording fees, and other expenses. Some lenders offer "no-cost" refinancing by rolling costs into the loan or charging a higher interest rate.
Should I refinance if I'm extending my loan term?
Extending your loan term (e.g., from 20 years remaining to 30 years) lowers your monthly payment but increases total interest paid. This may make sense if you need lower payments, but consider the long-term cost. You can always make extra payments to pay off the loan faster, effectively shortening the term without refinancing.
Can I refinance to remove PMI?
Yes, if you have sufficient equity (typically 20% or more), you can refinance to remove PMI. This is especially beneficial if you can also get a lower interest rate. Refinancing to remove PMI can save hundreds of dollars per month and may be worth it even if the interest rate is similar to your current rate.
How often can I refinance?
There's no legal limit on how often you can refinance, but each refinance comes with closing costs. Generally, you should only refinance if the benefits (lower rate, lower payment, better terms) outweigh the costs. Some lenders may have waiting periods or restrictions, so check with your lender. Consider the break-even point for each refinance.