Mortgage Calculator Online

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Mortgage Refinance Savings Calculator

Calculation Summary

New Monthly Payment:

$0.00

Monthly Savings:

$0.00

Break-Even Period:

0 Months

Total Savings (Life of Loan):

$0.00

function calculateRefinance() { var currPayment = parseFloat(document.getElementById('currPayment').value); var principal = parseFloat(document.getElementById('remainBalance').value); var annualRate = parseFloat(document.getElementById('newRate').value); var years = parseFloat(document.getElementById('newTerm').value); var costs = parseFloat(document.getElementById('closingCosts').value); if (isNaN(currPayment) || isNaN(principal) || isNaN(annualRate) || isNaN(years) || isNaN(costs) || annualRate 0) { document.getElementById('resBreakEven').innerText = Math.ceil(breakEven) + " Months"; document.getElementById('resTotalSavings').innerText = '$' + netSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); } else { document.getElementById('resBreakEven').innerText = "Never"; document.getElementById('resTotalSavings').innerText = "N/A (Costs more)"; } document.getElementById('results-area').style.display = 'block'; }

Understanding Your Mortgage Refinance Savings

Refinancing a mortgage can be a powerful financial move to lower your monthly expenses, reduce the total interest paid over the life of your loan, or shorten your loan term. However, it isn't always the right choice. This calculator helps you determine if the upfront costs of refinancing outweigh the potential monthly savings.

Key Factors in the Calculation

  • Interest Rate Differential: The most common reason to refinance is to secure a lower interest rate than your current one. Even a 0.5% to 1% drop can result in significant savings.
  • Closing Costs: Refinancing is not free. You will likely pay for appraisals, title insurance, and lender fees. These typically range from 2% to 5% of the loan amount.
  • The Break-Even Point: This is the most critical metric. It represents the number of months it will take for your monthly savings to cover the total cost of the refinance. If you plan to sell your home before reaching this point, refinancing may lose you money.
  • Loan Term: If you refinance a 30-year loan into a new 30-year loan after having already paid 5 years on your original mortgage, you are effectively extending your debt to 35 years. This might lower your payment but could increase the total interest paid.

When is Refinancing Worth It?

A general rule of thumb used to be that you should refinance if you could lower your rate by at least 2%. Today, many experts suggest 0.75% to 1% is enough to justify the costs. However, the real answer depends on your time horizon. If the calculator shows a break-even point of 30 months and you plan to live in the home for at least 5 more years, refinancing is likely a sound financial decision.

Refinancing Example

Suppose you have a $300,000 balance on a mortgage at 6.5%. Your current principal and interest payment is roughly $2,000. If you refinance into a new 30-year loan at 4.5%, your new payment drops to approximately $1,520, saving you $480 per month. If the closing costs are $5,000, your break-even point is about 10.4 months. In this scenario, you start "profiting" from the refinance in less than a year.

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