Mortgage Refinance Calculator Guide
A mortgage refinance calculator determines whether replacing your current loan with a new one at different terms will save you money, factoring in closing costs and break-even timing.
What Is Mortgage Refinancing?
Refinancing replaces your existing mortgage with a new loan, typically to get a lower interest rate, change the loan term, switch from an ARM to a fixed rate, or access home equity through a cash-out refinance. The calculator helps you determine if the savings justify the costs.
Key Inputs
Current Loan Details
Your remaining balance, current interest rate, remaining term, and monthly payment. These establish your baseline costs for comparison.
New Loan Terms
The proposed interest rate, loan term, and any points you would pay to buy down the rate. Even a 0.5% rate reduction on a large balance can yield significant savings.
Closing Costs
Refinancing typically costs 2–5% of the loan amount. This includes appraisal fees, title insurance, origination fees, and recording fees. These costs are critical to the break-even calculation.
Understanding Break-Even Point
The break-even point is when your cumulative monthly savings equal the closing costs. If refinancing saves you $200/month and costs $6,000, you break even at 30 months. If you plan to move before that, refinancing may not make financial sense.
When to Refinance
Consider refinancing when current rates are at least 0.75–1% lower than your existing rate, you plan to stay in the home past the break-even point, your credit score has improved significantly since the original loan, or you want to eliminate private mortgage insurance (PMI) by converting equity.
Related Guides
A fixed-rate mortgage calculator estimates your monthly payment, total interest, and amortization schedule for a loan with a constant interest rate over its full term.
Adjustable-Rate Mortgage (ARM) Calculator GuideAn adjustable-rate mortgage calculator estimates payments for loans where the interest rate changes periodically after an initial fixed period, helping you compare ARMs against fixed-rate options.