Mortgage Refinance Calculator
Can refinancing save you money? This calculator helps you compare your current loan with refinancing options to determine your potential savings and the time needed to reach the break-even point.
Refinance Calculator
Compare your current loan with refinancing options to see if you could save on your monthly payments and interest in the long run
Refinancing Results
Loan Amounts
Savings and Break-Even Point
Payment Comparison
Break-Even Point
The break-even chart is not available because there are no monthly savings.
Refinancing Analysis
This refinance does not offer any monthly savings. You may want to consider other options with a lower interest rate or a different loan term.
Understanding Mortgage Refinancing
When to Consider Refinancing?
- Lower Interest Rates: If current rates are at least 0.5-1% lower than your current rate.
- Improved Credit: If your credit score has significantly improved since obtaining your initial loan.
- Change in Term: To switch from a 30-year to a 15-year loan to pay off faster, or vice versa to reduce monthly payments.
- Rate Conversion: To move from an adjustable rate to a fixed rate, or vice versa depending on your goals.
- Cash-Out: To access your home's equity to finance renovations or consolidate debt.
Key Factors to Consider
- Closing Costs: Typically between 2% and 5% of the loan amount, these fees must be factored into your analysis.
- Break-Even Point: The time needed for monthly savings to offset closing costs.
- Planned Length of Stay: Refinancing makes more sense if you plan to stay in your home beyond the break-even point.
- Impact on Total Interest: A refinance may lower your monthly payments but increase total interest if you extend the loan term.
- Tax Implications: Mortgage interest may be tax-deductible in certain circumstances.
Types of Refinancing
- Rate-and-Term Refinance: Changing the interest rate and/or term without altering the loan balance.
- Cash-Out Refinance: Borrowing more than your current balance to access cash.
- Consolidation Refinance: Combining first and second mortgages into a single loan.
- FHA and VA Refinancing: Special options for government-backed loans.
- No-Appraisal Refinancing: Options that don't require a new property valuation.
How to Get the Best Rate
- Improve Your Credit Score: A better score translates to more favorable rates.
- Reduce Your Debt-to-Income Ratio: Less debt means less risk for lenders.
- Increase Your Equity: A lower loan-to-value ratio can qualify you for better rates.
- Compare Multiple Offers: Get quotes from at least 3-5 different lenders.
- Consider Discount Points: Paying points upfront can reduce your interest rate.
A Simple Rule: The Break-Even Point
A useful rule of thumb for evaluating a refinance is the break-even point:
Break-Even Point (months) = Closing Costs ÷ Monthly Savings
If you plan to stay in your home longer than the break-even point, refinancing is likely beneficial. Experts generally suggest that refinancing makes sense if:
- You can reduce your rate by at least 0.5% to 1%
- Your break-even point is less than 3-5 years
- You plan to stay in your home beyond the break-even point