Mortgage Refinancing Calculator
Calculate your potential savings when refinancing your mortgage
A Mortgage Refinancing Calculator helps homeowners determine whether refinancing their mortgage makes financial sense by comparing current and proposed loan terms. This tool calculates potential savings, break-even points, and long-term costs.
Key Features of a Mortgage Refinancing Calculator
1. Input Fields
| Field | Description |
|---|---|
| Current Mortgage Balance | Remaining principal on existing loan |
| Current Interest Rate | Existing mortgage APR |
| Remaining Loan Term | Years left on current mortgage |
| New Loan Amount | Refinanced principal (may include closing costs) |
| New Interest Rate | Refinance offer rate |
| New Loan Term | 15, 20, or 30 years |
| Closing Costs | Fees for refinancing (lender fees, appraisal, etc.) |
| Estimated Home Value | Used for LTV calculation |
| Planned Ownership Duration | How long you'll keep the home |
2. Output Metrics
| Metric | Why It Matters |
|---|---|
| New Monthly Payment | Compared to current payment |
| Monthly Savings | Difference between old and new payments |
| Total Interest Savings | Over life of the loan |
| Break-Even Point | When savings cover closing costs |
| Loan-to-Value (LTV) Ratio | Determines PMI requirements |
| Total Cost Comparison | Current vs. refinanced loan |
How Refinancing Calculations Work
1. Monthly Payment Formula
Where:
M = Monthly payment
P = Principal loan amount
r = Monthly interest rate (APR/12)
n = Number of payments (term in years × 12)
2. Break-Even Analysis
Example:
Closing Costs = $4,000
Monthly Savings = $200
Break-Even = 20 months
3. Net Savings Calculation
When Does Refinancing Make Sense?
Good Reasons to Refinance
✔ Lower Interest Rate (0.5-1%+ reduction)
✔ Shorter Loan Term (e.g., 30 → 15 years)
✔ Switch from ARM to Fixed-Rate
✔ Cash-Out for Home Improvements
✔ Remove PMI (if LTV < 80%)
Poor Reasons to Refinance
✖ Extending Loan Term (unless lowering rate significantly)
✖ Small Rate Reduction (<0.5%) if planning to move soon
✖ Frequent Refinancing (resets amortization)
Refinancing Cost Considerations
| Fee Type | Typical Cost |
|---|---|
| Application Fee | $300-$500 |
| Appraisal | $300-$600 |
| Title Search/Insurance | $700-$1,000 |
| Origination Fees | 0.5%-1% of loan |
| Points (Optional) | 1% per 0.25% rate reduction |
| Total Average Costs | 2%-5% of loan amount |
Example Refinance Scenario
Current Loan:
Balance: $250,000
Rate: 6.5%
Term: 30 years (25 years remaining)
Payment: $1,580
New Loan:
Amount: $250,000
Rate: 5.25%
Term: 20 years
Closing Costs: $6,000
Results:
New Payment: $1,677 (+$97/month)
Interest Savings: $112,000 (life of loan)
Break-Even: 62 months
Net Savings: $106,000
Advanced Features in Premium Calculators
Cash-Out Refinance Options
ARM vs Fixed Comparisons
Tax Implications
Private Mortgage Insurance (PMI) Analysis
Investment Property Calculations
Try This Refinance Rule of Thumb
"The 1-2-3 Rule"
Refinance if you can:
1️⃣ Reduce Rate by 1%+
2️⃣ Recoup Costs in <2 Years
3️⃣ Keep Home for 3+ Years