Mortgage Refinance Savings Calculator
Determine if refinancing your home loan will save you money by comparing your current mortgage with new potential terms.
New Monthly Payment:
$0.00
Monthly Savings:
$0.00
Break-Even Point:
0 Months
Lifetime Savings (After Costs):
$0.00
How to Use the Mortgage Refinance Calculator
Deciding to refinance your mortgage is a major financial move. This calculator helps you look beyond the interest rate to see the actual "break-even" point—the moment your monthly savings cover the upfront costs of the new loan.
Key Metrics Explained
- Remaining Loan Balance: The total amount you still owe on your current mortgage.
- Closing Costs: Fees for appraisal, title insurance, and lender origination. These typically range from 2% to 5% of the loan amount.
- Break-Even Point: This is the most critical number. If you plan to sell the house before reaching this month, refinancing may actually lose you money.
Example Calculation:
If you owe $300,000 and lower your payment by $200 a month, but it costs $4,000 in closing fees, your break-even point is 20 months ($4,000 / $200). If you stay in the home for 10 years, you will net $20,000 in total savings.
If you owe $300,000 and lower your payment by $200 a month, but it costs $4,000 in closing fees, your break-even point is 20 months ($4,000 / $200). If you stay in the home for 10 years, you will net $20,000 in total savings.
When Should You Refinance?
Generally, experts suggest refinancing if you can lower your interest rate by at least 0.75% to 1%. However, if you are switching from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage for stability, or if you are shortening your term (e.g., from 30 years to 15 years), the "savings" might look different in the long run.
Factors That Affect Your Savings
1. Credit Score: A higher score unlocks the lowest advertised rates.
2. Home Equity: If you have less than 20% equity, you may have to pay Private Mortgage Insurance (PMI).
3. Loan Term: Restarting a 30-year clock when you only had 20 years left can result in paying more interest over time, even with a lower monthly payment.