Mortgage Refinancing Calculator

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Current Interest Rate

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New Mortgage

New Interest Rate

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Closing Costs

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Mortgage Refinancing Made Simple

Your Complete Guide to Discovering Potential Savings with Our Refinancing Calculator

Imagine saving hundreds of dollars every month just by making one financial decision. That's the power of mortgage refinancing! But how do you know if it's the right move for you? That's where our Mortgage Refinancing Calculator comes in - it's like having a financial advisor in your pocket!

This guide will walk you through everything about mortgage refinancing, from the basics to the advanced calculations. We'll use simple language, real-world examples, and our interactive calculator to help you make an informed decision.

What Is Mortgage Refinancing?

Mortgage refinancing is like trading in your old mortgage for a new one. You take out a new loan to pay off your existing mortgage, usually to get better terms like a lower interest rate, lower monthly payments, or to change your loan term.

Simple Example:

Let's say you bought a house 5 years ago with a $300,000 mortgage at 5.5% interest. Now interest rates have dropped to 4.25%. Refinancing means:

• You get a new $300,000 loan at 4.25%
• The new loan pays off your old 5.5% loan
• You now have a lower interest rate and save money!

Try Our Mortgage Refinancing Calculator

No complex math needed! Just enter your numbers and discover your potential savings in seconds.

Calculate My Refinancing Savings

The Key Numbers in Refinancing

1. Current Loan Balance

This is how much you still owe on your mortgage. It's NOT your original loan amount - it's what's left to pay.

Example:

Original loan: $300,000

Paid over 5 years: $40,000 in principal

Current balance: $260,000

2. Current Interest Rate

The annual percentage rate (APR) you're currently paying on your mortgage.

Pro Tip:

You can find your current rate on your monthly mortgage statement or by contacting your lender. Even a small rate drop can mean big savings!

3. Remaining Term

How many years you have left on your current mortgage. A 30-year mortgage after 5 years has 25 years remaining.

4. New Interest Rate

The rate you qualify for today. This depends on your credit score, current market rates, and the lender.

5. New Loan Term

You can choose the same term (like staying with 25 years) or reset to a longer term (like going back to 30 years).

6. Closing Costs

These are the fees you pay to refinance, typically 2-6% of your loan amount. They include:

• Application fees
• Appraisal fees
• Title insurance
• Attorney fees

The Magic Formula: How Refinancing Works

The Monthly Payment Formula:

M = P × [r(1+r)^n] ÷ [(1+r)^n - 1]

Where:

• M = Monthly payment
• P = Loan principal
• r = Monthly interest rate
• n = Total number of payments

Don't worry about the complex math - our calculator does all this for you automatically!

Complete Calculation Example:

Current Mortgage:

• Balance: $260,000
• Rate: 5.5%
• Remaining: 25 years
• Monthly payment: $1,599

Refinanced Mortgage:

• Balance: $260,000
• New rate: 4.25%
• New term: 30 years
• Monthly payment: $1,279

Result: Save $320 per month!

The Most Important Number: Break-Even Point

What Is Break-Even Point?

The break-even point is how long it takes for your monthly savings to equal your closing costs. This tells you if refinancing is worth it!

Break-Even Formula:

Break-Even (months) = Closing Costs ÷ Monthly Savings

Break-Even Example:

Closing costs: $5,000

Monthly savings: $320

$5,000 ÷ $320 = 15.6 months

This means you'll recover your closing costs in about 16 months. After that, all savings are pure profit!

What Does Your Calculator Tell You?

Our calculator gives you three key results:

Result	What It Means	What's Good?
Monthly Savings	How much you'll save each month	✅ $100+ is usually worth it
Break-Even Point	How long to recover closing costs	✅ 24 months or less is ideal
Total Interest Savings	Total savings over loan life	✅ $10,000+ is significant

Pro Tip: The 1% Rule

Many experts suggest refinancing when you can lower your rate by at least 1%. Our calculator helps you see exactly how much that 1% could save you!

Key Features of Our Calculator

50+ Currencies

Calculate in your local currency - we support everything from US Dollars to Japanese Yen and Euro.

Visual Charts

See your savings in colorful, easy-to-understand charts that show current vs. new payments.

Auto-Save History

Your inputs are automatically saved as you type. No losing data if you close the page!

Export Options

Save results as PDF, HTML, or text files for comparison, record-keeping, or sharing with advisors.

How to Use the Calculator (Step by Step)

Step 1: Find Your Current Mortgage Details

Check your latest mortgage statement for:

• Current balance (what you owe)
• Current interest rate
• Years remaining on your loan

Step 2: Research New Rates

Check current mortgage rates online or contact lenders. Use rates you actually qualify for based on your credit score.

Step 3: Estimate Closing Costs

Most refinances cost 2-6% of your loan amount. Use $5,000 as a starting estimate, or ask lenders for quotes.

Step 4: Choose Your New Term

Decide: Keep the same remaining term or start fresh with a new 30-year loan?

Step 5: Let the Calculator Work Its Magic!

Click "Calculate Savings" and watch your potential savings appear instantly.

Quick Calculation Tip

Our calculator automatically saves your inputs as you type. Try different scenarios - what if rates drop another 0.25%? What if closing costs are higher?

Real-World Scenarios

Scenario A: Rate-and-Term Refinance

Lower your rate AND reset your term. This gives you maximum monthly savings.

Scenario B: Cash-Out Refinance

Borrow more than your current balance to get cash for home improvements or debt consolidation.

Scenario C: Shortening Your Term

Refinance to a 15-year loan to pay off faster and save on total interest, even if your monthly payment stays similar.

Frequently Asked Questions (15 Common Questions)

1. How much does it cost to refinance?

Typically 2-6% of your loan amount. For a $300,000 loan, that's $6,000-$18,000. Our calculator includes closing costs in the break-even calculation.

2. What's a "good" break-even point?

Generally, 24 months or less is excellent. If you plan to stay in your home longer than your break-even point, refinancing makes sense.

3. Does refinancing restart my 30-year clock?

It can, but doesn't have to. You can refinance into a loan with the same remaining term (like 25 years left) to avoid resetting the clock.

4. How does my credit score affect refinancing?

Higher scores get better rates. A 720+ score typically gets the best rates, while below 680 may get higher rates or face difficulty.

5. Should I pay points to lower my rate?

Points (prepaid interest) can lower your rate. Use our calculator to compare paying points vs. taking a slightly higher rate with no points.

6. What's the difference between rate and APR?

Rate is the interest percentage. APR includes all costs (rate + fees). Always compare APRs when shopping loans.

7. Can I refinance with less than 20% equity?

Yes, but you'll likely pay PMI (private mortgage insurance). This adds to your monthly cost, which our calculator can factor in.

8. How often can I refinance?

As often as you want, but you'll pay closing costs each time. Wait until savings justify the costs - use our break-even calculation!

9. What happens to my escrow account?

Your old escrow (for taxes and insurance) is refunded, and a new one is set up with your new lender.

10. Does refinancing affect my taxes?

You may lose some mortgage interest deduction if your payment drops significantly. Consult a tax professional for your situation.

11. What's a "no-closing-cost" refinance?

The lender pays your closing costs but gives you a higher rate. Our calculator shows if this is better than paying costs for a lower rate.

12. How long does refinancing take?

Typically 30-45 days, similar to getting your original mortgage. The process includes appraisal, underwriting, and closing.

13. Can I refinance an FHA or VA loan?

Yes! FHA has streamline refinancing, and VA has IRRRL (Interest Rate Reduction Refinance Loan) with simplified processes.

14. What if I want to pay off my loan faster?

Refinance to a shorter term (like 15 years). Your monthly payment might be similar or slightly higher, but you'll save on total interest.

15. How accurate is this calculator?

Very accurate for standard fixed-rate mortgages. It uses standard financial formulas. For adjustable rates or special programs, consult a lender for precise numbers.

Final Thoughts

Refinancing your mortgage is one of the biggest financial decisions you can make as a homeowner. It's not just about getting a lower rate - it's about understanding the complete picture: monthly savings, closing costs, break-even point, and total interest savings.

Our calculator makes this complex decision simple and clear. Whether you're saving for retirement, planning home improvements, or just want more breathing room in your monthly budget, understanding your refinancing options is the first step.

Remember:

Numbers tell a story. Use our calculator to explore different scenarios, ask questions, and make an informed decision. Your home is likely your biggest investment - make sure your mortgage is working as hard for you as you work for it!