Refinance Calculator

Introduction to Mortgage Refinancing

Refinancing your mortgage can reduce monthly payments, lower interest costs, and even unlock cash from home equity. Whether rates have dropped since you originated your loan or you wish to shorten your term, a Refinance Calculator helps you compare the financial impact side by side. By factoring in closing costs, new terms, and optional cash-out, you can make an informed decision that aligns with your goals.

How This Refinance Calculator Works

Our tool runs two scenarios—your current mortgage versus the proposed refinance. It calculates:
• Monthly Payment: based on balance, rate, and term.
• Monthly Savings: difference between old and new payment.
• Break-Even Point: months needed to recoup closing costs.
• Interest Saved: estimated total savings over remaining term.
• Cash-Out Impact: new balance includes any equity you pull out.

Step-by-Step Usage Guide

1. Enter Loan Balance: Your remaining principal from your lender statement.
2. Current Rate & Term: Input your existing rate (as decimal) and years left.
3. Refinance Rate & Term: Fill in the new rate offer and desired term length.
4. Select State: Choose your state to load typical closing-cost percentage.
5. Review Closing Costs: Adjust the default based on lender quote if needed.
6. Cash-Out Option: Enter equity amount you wish to extract (or 0).
7. View Results: See payment comparison, savings, break-even, and total interest saved.
8. Export or Share: Use Print, Download, or Share to save your analysis.

Key Considerations

• Break-Even Analysis: If you plan to stay in your home beyond the break-even point, refinancing often makes sense.
• Cash-Out Caution: Extracting equity increases your loan balance and may extend your break-even timeline.
• Term Trade-Off: Shortening the term raises payments but saves interest; lengthening lowers payments but costs more over time.
• Credit & Fees: Good credit quality can qualify you for lower rates; always shop lenders for best closing-cost offers.

Case Study

Example: The Johnsons have \$250,000 remaining at 4.5% with 20 years left. They can refinance to 3.0% over 20 years with \$6,250 closing costs. Our calculator shows monthly savings of \$184, a break-even at 34 months, and estimated interest savings of \$44,160 over the remaining term.

Frequently Asked Questions

1. Will refinancing lower my monthly payment?

If the new rate is lower or the term longer, your monthly payment will drop. Use the calculator to see precise savings.

2. How do I know if closing costs are worth it?

The break-even point tells you how many months it takes to recoup those fees. Plan to stay in your home beyond that.

3. Can I pull cash out and still save?

Yes, but cash-out increases your loan balance. Compare scenarios with and without cash-out to decide.

4. Should I shorten or lengthen my term?

Shorter terms save interest but raise payments. Longer terms lower payments but may cost more overall.

5. How often should I shop for refinance rates?

Monitor rates quarterly or when Federal Reserve policy shifts. Even small drops can justify refinancing.

Related Tools

• Mortgage Payment Calculator
• Amortization Schedule Calculator

External Resources

• CFPB Guide to Refinancing
• Freddie Mac Refinance Information
• FHA Refinance Programs (HUD)

Disclaimer

This calculator offers estimates for planning purposes only. Actual loan terms, closing costs, and savings depend on lender offers, credit profile, and market conditions. Consult your loan officer for specific advice.