Mortgage Refinance Calculator

Mortgage refinancing is the process of replacing your existing mortgage with a new loan, typically with better terms. The primary goals of refinancing are usually to lower your interest rate, reduce your monthly payment, shorten your loan term, or access equity in your home through cash-out refinancing.

When you refinance, you're essentially paying off your old mortgage and taking on a new one. This process involves an application, credit check, home appraisal, and closing costs similar to those you paid with your original mortgage.

Interest rates have dropped

If market interest rates are significantly lower than your current mortgage rate (typically at least 0.5 to 1 percentage point), refinancing might make sense. Lower rates can lead to reduced monthly payments and substantial interest savings over the life of your loan.

You want to shorten your loan term

If you're financially able to make higher monthly payments, refinancing from a 30-year to a 15-year mortgage can help you build equity faster and save significantly on interest costs over the life of the loan.

You need to access home equity

If you've built up equity in your home and need funds for major expenses like home improvements, education costs, or debt consolidation, a cash-out refinance allows you to borrow more than you owe on your current mortgage and receive the difference in cash.

You want to switch from an adjustable to a fixed rate

If you currently have an adjustable-rate mortgage (ARM) and want the stability of predictable payments, refinancing to a fixed-rate mortgage can protect you from potential interest rate increases in the future.

Refinancing isn't free, and the associated costs play a crucial role in determining whether it's financially beneficial. Common refinancing costs include:

• Closing costs (typically 2-5% of the loan amount)
• Home appraisal fees ($300-$500)
• Loan origination fees (about 1% of the loan amount)
• Title insurance and title search fees
• Potential prepayment penalties on your existing mortgage

To determine if refinancing makes financial sense, you need to calculate how long it will take to recoup these costs through your monthly savings. This is known as the 'break-even point' and is a key metric in our refinance calculator.