Mortgage Refinance Calculator
Determine if refinancing your mortgage makes financial sense.
Compare current loan vs new loan terms, closing costs, and calculate your break-even point.
Compare current loan vs new loan terms, closing costs, and calculate your break-even point.
Last updated: July 2025
Manually verified by: Sarah L., Financial Analyst from ManyCalcs team
Formula source: Standard mortgage formulas, banking industry standards
When to refinance?
Consider refinancing when you can reduce your rate by 0.5-1% or need to change loan terms.
Consider refinancing when you can reduce your rate by 0.5-1% or need to change loan terms.
Refinance Analysis
Monthly Savings
-
Break-Even
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| Current Loan | New Loan | |
|---|---|---|
| Monthly Payment | - | - |
| Interest Rate | - | - |
| Remaining Balance | - | - |
| Total Interest | - | - |
Lifetime Interest Savings: -
Net Benefit (after closing costs): -
Net Benefit (after closing costs): -
Enter your mortgage details to see if refinancing makes sense for you.
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Important Financial Disclaimer
Educational Purpose Only: This mortgage refinance calculator is provided for informational and educational purposes only. Results are estimates based on the information provided and should not be considered as financial advice.
Calculation Limitations
- Results are estimates and may not reflect actual loan terms
- Does not include all possible fees and costs
- Assumes consistent payment schedule
- Market conditions and rates change frequently
Important Considerations
- Credit score and income affect qualification
- Property value and loan-to-value ratio matter
- Consider tax implications and deductibility
- Evaluate time remaining in current home
Professional Consultation Required: Always consult with qualified mortgage professionals, financial advisors, and tax specialists before making refinancing decisions.
Refinancing Strategies & Considerations
When to Refinance
Rate Reduction Goals
- 0.5-0.75%: May be worth it with low closing costs
- 1% or more: Generally worth refinancing
- 2% or more: Almost always beneficial
- Consider timeframe: Staying in home 2+ years
Life Changes
- Need to switch from ARM to fixed rate
- Want to remove PMI with 20%+ equity
- Change loan term (15-year vs 30-year)
- Access equity for major expenses
Market Conditions
- Interest rates have dropped significantly
- Your credit score has improved
- Home values have increased substantially
- Economic conditions favor borrowers
When NOT to Refinance
Financial Situations
- Planning to move within 2-3 years
- Close to paying off current mortgage
- Credit score has decreased significantly
- Unstable income or employment
Cost Concerns
- High closing costs vs. monthly savings
- Break-even period too long
- Cash-out needs exceed home equity
- Current loan has prepayment penalties
Market Factors
- Interest rates are rising rapidly
- Home values have declined
- Limited refinancing options available
- Economic uncertainty affecting approval
Types of Mortgage Refinancing
Rate-and-Term Refinance
- Change interest rate and/or loan term
- Same loan amount (plus closing costs)
- Most common refinancing type
- Lower rates = best choice for savings
Cash-Out Refinance
- Borrow more than current balance
- Access home equity as cash
- Higher loan amount and payments
- Use for home improvements, debt consolidation
Cash-In Refinance
- Pay down principal at closing
- Lower loan amount and payments
- May help eliminate PMI
- Reduce long-term interest costs
Typical Refinancing Costs
| Cost Category | Typical Range | Description | Negotiable? |
|---|---|---|---|
| Loan Origination Fee | 0.5% - 1.5% | Lender's fee for processing the loan | Yes |
| Appraisal Fee | $400 - $800 | Professional home valuation | Sometimes |
| Title Insurance | $500 - $1,500 | Protects against title defects | No |
| Credit Report | $25 - $50 | Credit check and verification | No |
| Recording Fees | $50 - $500 | Government fees to record deed | No |
| Attorney/Closing Fees | $500 - $1,000 | Legal and closing services | Yes |
Total closing costs typically range from 2-6% of loan amount. Shop around and negotiate fees where possible.
Refinancing vs. Alternative Strategies
| Strategy | Pros | Cons | Best For |
|---|---|---|---|
| Rate-and-Term Refinance | Lower monthly payments, reduced total interest, potential PMI removal | Closing costs, extends loan term if choosing longer term | Rates dropped 0.5%+, staying in home 2+ years |
| Cash-Out Refinance | Access equity, potentially lower rate than HELOC, tax-deductible if used for home improvements | Higher loan balance, closing costs, resets loan term | Need substantial cash, rates favorable, long-term plans |
| HELOC (Home Equity Line) | Lower closing costs, flexibility to draw funds as needed, interest-only payments initially | Variable rates, payment shock after draw period, shorter repayment terms | Need flexibility, uncertain amount, good credit |
| Home Equity Loan | Fixed rate, lower costs than refinancing, predictable payments | Higher rates than first mortgage, additional monthly payment | Need fixed amount, current mortgage rate is good |
Mortgage Refinancing FAQ
Common questions about mortgage refinancing, costs, timing, and qualification requirements.
The general rule has evolved with market conditions:
Traditional Guidelines
- 1% rule: Classic advice was 1% rate reduction minimum
- 0.5-0.75%: May be worthwhile with low closing costs
- 0.25%: Can work for large loans or special circumstances
- Break-even analysis: Focus on time to recoup costs
Modern Considerations
- Closing costs are lower now (online lenders)
- No-cost refinancing options available
- Consider total financial picture, not just rate
- Factor in how long you'll stay in the home
Bottom Line: If you can break even within 2-3 years and plan to stay in your home longer, refinancing likely makes sense regardless of the rate difference.
Typical refinancing timeline and steps:
Timeline Overview
- Application: 1-2 days
- Document review: 3-7 days
- Appraisal scheduling: 1-2 weeks
- Underwriting: 1-3 weeks
- Closing preparation: 3-7 days
- Total timeline: 30-45 days typical
Factors Affecting Timeline
- Faster: Simple rate-and-term, excellent credit, quick document submission
- Slower: Cash-out refinance, credit issues, missing documents, busy market
- Market conditions: High demand can slow process
- Lender efficiency: Online vs traditional lenders vary
Speed It Up: Submit all documents promptly, respond quickly to lender requests, and consider pre-approval if shopping for rates.
Yes, there are several ways to handle closing costs:
Rolling Costs Into Loan
- How it works: Add closing costs to loan balance
- Benefit: No cash needed at closing
- Drawback: Pay interest on costs over loan life
- Requirement: Must have sufficient equity
Other Options
- No-cost refinance: Lender pays costs, you get higher rate
- Lender credits: Choose higher rate for closing cost credits
- Pay out of pocket: Best long-term savings if you have cash
- Combination: Pay some costs, roll in others
| Option | Upfront Cost | Monthly Payment | Total Interest |
|---|---|---|---|
| Pay cash for costs | Highest | Lowest | Lowest |
| Roll costs into loan | None | Medium | Medium |
| No-cost refi (higher rate) | None | Highest | Highest |
Decision Factor: If you plan to stay in the home long-term, paying costs upfront usually saves the most money. If you might move within a few years, rolling costs in or no-cost refinancing may be better.
Refinancing has minimal and temporary impact on credit:
Temporary Impacts
- Hard inquiry: 2-5 point drop typically
- Multiple inquiries: Treated as one if within 14-45 days
- Duration: Impact fades within 3-6 months
- Falls off: Inquiries removed after 2 years
Potential Benefits
- Payment history: Continues positive history
- Credit mix: Maintains installment loan type
- Lower utilization: If cash-out pays off credit cards
- Long-term positive: Lower payments help credit health
Credit Shopping Tips
- Shop for rates within a 14-45 day window
- All mortgage inquiries in this period count as one
- Don't apply for other credit during this time
- Continue making current mortgage payments on time
Bottom Line: The temporary credit score impact is minimal compared to the potential long-term savings from refinancing. Don't let credit concerns stop you from pursuing beneficial refinancing.
The choice depends on your financial goals and situation:
15-Year Mortgage
Advantages:
- Lower interest rates (typically 0.25-0.75% less)
- Massive interest savings over loan life
- Build equity much faster
- Debt-free in half the time
- Forced savings through higher payments
Disadvantages:
- Higher monthly payments (often 30-50% more)
- Less cash flow flexibility
- Harder to qualify due to higher DTI
- Less money available for other investments
30-Year Mortgage
Advantages:
- Lower monthly payments
- More cash flow flexibility
- Easier to qualify
- Can invest payment difference
- Better for uncertain income situations
Disadvantages:
- Higher interest rates
- Much more interest paid over loan life
- Slower equity building
- Longer debt commitment
| Scenario | Loan Amount | 15-Year (3.5%) | 30-Year (4.0%) | Interest Savings |
|---|---|---|---|---|
| Example | $300,000 | $2,145/month | $1,432/month | $201,000 |
Consider This: You can get 30-year flexibility while achieving 15-year benefits by making extra principal payments. This gives you the option to reduce payments if needed while normally paying extra.
Mortgage Refinancing Education Guide
Comprehensive guide to understanding refinancing concepts, timing, and making informed decisions.
Break-Even Analysis
Calculating Your Break-Even Point
Break-even = Total Closing Costs ÷ Monthly Savings. For example: $4,000 closing costs ÷ $200 monthly savings = 20 months to break even.
Beyond Break-Even
Consider how long you'll stay in the home after break-even. If you break even in 20 months and stay 5 more years, you'll save $12,000 ($200 × 60 months).
Hidden Factors
Don't forget opportunity cost of closing costs, tax implications of deductions, and potential investment returns on the money used for costs.
Rate Shopping Strategy
Shop Smart in 14-45 Days
All mortgage applications within this window count as one credit inquiry. Get quotes from 3-5 lenders including banks, credit unions, and online lenders.
Compare Total Costs
Don't just compare rates. Look at APR, closing costs, lender fees, and total loan costs. A slightly higher rate with lower fees might save money.
Negotiate Everything
Many fees are negotiable: origination fees, application fees, processing fees. Use competing offers as leverage to get better terms.