Mortgage Refinance Savings Calculator
Calculate your potential monthly savings and determine your break-even point to see if refinancing your home loan makes financial sense.
Your Refinance Summary
Should You Refinance Your Mortgage?
Deciding to refinance your mortgage is a significant financial move. While the primary goal is usually to secure a lower interest rate, there are several factors to consider beyond the headline percentage. This calculator helps you look at the Break-Even Point, which is the most critical metric for any homeowner.
How the Refinance Calculator Works
Our tool compares your current monthly principal and interest payment against a new loan based on your current balance. It factors in the costs associated with refinancing—such as appraisal fees, title insurance, and lender origination points—to tell you exactly how many months it will take for your monthly savings to cover those upfront costs.
Example Calculation
Imagine you have a $300,000 balance at a 6.5% interest rate. Your monthly payment is roughly $1,896. If you refinance into a 30-year loan at 5.25%, your new payment would be $1,656.
- Monthly Savings: $240
- Closing Costs: $4,500
- Break-Even Point: 18.75 months
In this scenario, if you plan to stay in the home for more than 19 months, refinancing is a winning strategy.
When Does Refinancing Make Sense?
Generally, experts suggest refinancing is worth it if you can lower your interest rate by at least 0.75% to 1%. However, if you are shortening your term (e.g., moving from a 30-year to a 15-year mortgage), your monthly payment might increase, but you will save tens of thousands of dollars in interest over the life of the loan.
Key Costs to Remember
When using the mortgage refinance calculator, ensure you include realistic closing costs. Typically, refinance costs range from 2% to 5% of the loan amount. These include:
- Application and Loan Origination Fees
- Home Appraisal Fees
- Title Search and Insurance
- Credit Report Fees