Estimate your potential savings and new monthly payments when refinancing to a 30-year fixed-rate mortgage.
Refinance Calculator Inputs
$ Amount of your existing mortgage.
% Annual interest rate on your current loan.
% Annual interest rate for the new loan.
30 Years
15 Years
20 Years
The duration of your new mortgage.
$ Total fees and expenses for the refinance.
Refinance Results
$0.00
Total Interest Saved: $0.00
New Total Interest Paid: $0.00
Break-Even Point: 0 Months
How it works: We calculate your current monthly principal & interest (P&I) payment and your new P&I payment using the loan amortization formula. The difference in total interest paid over the life of the loan, minus closing costs, gives you the net savings. The break-even point is when your closing costs are recouped by your monthly savings.
Amortization Schedule Comparison
Current Loan vs. New Loan
Month
Current P&I
Current Balance
New P&I
New Balance
Loan Balance Over Time
What is a 30-Year Fixed Refinance?
A 30-year fixed refinance is a financial strategy where a homeowner replaces their existing mortgage with a new one that has a fixed interest rate and a repayment term of 30 years. This process is undertaken to potentially lower monthly payments, reduce the overall interest paid over the life of the loan, shorten the loan term, or tap into home equity. The "fixed" aspect is crucial, meaning the interest rate remains the same for the entire 30-year period, providing predictability in monthly housing expenses. Refinancing involves closing costs, so it's essential to ensure the long-term benefits outweigh these upfront expenses. A 30-year fixed refinance is particularly popular because it offers the longest repayment period, which typically results in the lowest possible monthly payments compared to shorter terms, making homeownership more affordable for many.
Who should use a 30-year fixed refinance calculator? Homeowners considering refinancing their current mortgage, especially those looking to:
Lower their monthly mortgage payment by securing a lower interest rate.
Consolidate debt or fund large expenses by taking cash out through a refinance.
Switch from an adjustable-rate mortgage (ARM) to a predictable fixed rate.
Extend their payment timeline to improve monthly cash flow, even if the interest rate isn't significantly lower.
Common misconceptions about refinancing include believing it's always beneficial, underestimating closing costs, or not fully understanding the impact of a new loan term on total interest paid. Many homeowners focus solely on the new monthly payment without considering the long-term financial implications. It's vital to use a 30-year fixed refinance calculator to get a clear picture.
30-Year Fixed Refinance Formula and Mathematical Explanation
The core of a 30-year fixed refinance calculator relies on the standard mortgage payment formula, also known as the annuity formula. This formula calculates the fixed periodic payment (M) required to fully amortize a loan over its term.
The formula is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Monthly Payment (Principal & Interest)
P = Principal Loan Amount (the balance of the loan)
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
Variable Explanations:
Variables Used in Mortgage Calculations
Variable
Meaning
Unit
Typical Range
P (Principal)
The outstanding balance of the loan being refinanced, or the new loan amount after considering closing costs rolled in.
Currency ($)
$10,000 – $1,000,000+
Annual Interest Rate
The yearly rate charged by the lender.
Percent (%)
2.5% – 8.0%+
i (Monthly Interest Rate)
The annual interest rate divided by 12.
Decimal
0.00208 – 0.00667+
Loan Term (Years)
The total duration of the loan agreement.
Years
15, 20, 30 years
n (Number of Payments)
The total number of monthly payments over the loan term.
Months
180, 240, 360
M (Monthly Payment)
The fixed amount paid each month, covering principal and interest.
Currency ($)
Varies based on P, i, n
Closing Costs
Fees associated with originating the new loan.
Currency ($)
$2,000 – $10,000+
Calculating Savings:
Calculate the current total interest paid: (Current Monthly P&I * Current Loan Term in Months) – Current Loan Balance.
Calculate the new total interest paid: (New Monthly P&I * New Loan Term in Months) – New Loan Balance (adjusted for closing costs if rolled in).
Calculate total interest saved: Current Total Interest Paid – New Total Interest Paid.
Calculate net savings: Total Interest Saved – Closing Costs.
A 30-year fixed refinance aims to reduce 'M' or the total interest paid over time.
Practical Examples (Real-World Use Cases)
Example 1: Lowering Monthly Payments
Sarah has an existing mortgage with a balance of $300,000 at 5.5% interest over 25 years remaining (originally 30). She's considering refinancing to a new 30-year fixed loan at 4.0% interest. Her estimated closing costs are $6,000. She wants to lower her monthly payment.
Current Loan Details: Balance: $300,000, Rate: 5.5%, Term Remaining: 25 years (300 months)
New Loan Details: Balance: $300,000, Rate: 4.0%, Term: 30 years (360 months), Closing Costs: $6,000
Using a 30-year fixed refinance calculator:
Current Monthly P&I: ~$1,704.72
New Monthly P&I: ~$1,432.25
Monthly Savings: ~$272.47
Total Interest Saved (over 30 yrs): ~$115,000+ (Note: This is higher than original loan's remaining interest because the term is longer)
Net Savings (after closing costs): ~$109,000+
Break-Even Point: $6,000 / $272.47 ≈ 22 months
Interpretation: Sarah can significantly lower her monthly payment by $272.47. While the total interest paid over the new 30-year term will be higher than what she would have paid on her original loan, her net savings after closing costs are substantial, and she recoups those costs in under two years. This 30-year fixed refinance improves her cash flow.
Example 2: Rate Reduction with Shorter Term Goal
John has a $200,000 balance on his mortgage at 6.0% interest with 28 years remaining. He wants to refinance to a 30-year fixed loan at 4.5% but aims to pay it off faster than the original loan's remaining term. Closing costs are $5,000.
Current Loan Details: Balance: $200,000, Rate: 6.0%, Term Remaining: 28 years (336 months)
New Loan Details: Balance: $200,000, Rate: 4.5%, Term: 30 years (360 months), Closing Costs: $5,000
Using a 30-year fixed refinance calculator:
Current Monthly P&I: ~$1,199.10
New Monthly P&I: ~$1,011.65
Monthly Savings: ~$187.45
Total Interest Paid (New 30yr): ~$164,194
Total Interest Paid (Original 28yr remaining): ~$135,748
Interest Increase: ~$28,446
Net Savings (after closing costs): ~$23,446 (This calculation assumes paying the new loan for 30 years. If John pays extra to match the original payoff timeline, savings change.)
Break-Even Point: $5,000 / $187.45 ≈ 27 months
Interpretation: John lowers his monthly payment by $187.45. If he continues paying the new loan for the full 30 years, he'll pay more interest overall. However, if he uses the monthly savings ($187.45) to make extra principal payments on the new loan, he could potentially pay it off faster than the original remaining term and still save money. The 30-year fixed refinance provides flexibility. The break-even point is about 27 months.
How to Use This 30-Year Fixed Refinance Calculator
Using our 30-year fixed refinance calculator is straightforward. Follow these steps to understand your potential savings:
Enter Current Loan Balance: Input the exact amount you still owe on your current mortgage.
Enter Current Interest Rate: Provide the annual interest rate of your existing loan.
Enter New Interest Rate: Input the interest rate you've been offered or are targeting for your new refinance loan.
Select Loan Term: Choose the desired term for your new loan (e.g., 30 years).
Estimate Closing Costs: Input the total fees and expenses associated with the refinance. This is crucial for calculating net savings and break-even.
Click 'Calculate Savings': The calculator will instantly display your new estimated monthly principal and interest (P&I) payment.
How to Read Results:
Primary Result (New Monthly Payment): This is your estimated new P&I payment. Compare it to your current P&I payment.
Total Interest Saved: This shows the potential reduction in the total interest you'll pay over the life of the loan, *before* accounting for closing costs.
New Total Interest Paid: The total interest you'll pay on the new loan over its full term.
Break-Even Point: This indicates how many months it will take for your monthly savings to cover your closing costs. A shorter break-even point generally signifies a more favorable refinance.
Decision-Making Guidance: A refinance is typically considered worthwhile if the monthly savings are significant, the break-even point is relatively short (often aiming for under 3-5 years), and your long-term financial goals align with the new loan terms. Use the amortization table and chart to visualize how your loan balance decreases over time with both your current and potential new loan.
Key Factors That Affect 30-Year Fixed Refinance Results
Several factors significantly influence the outcome of a 30-year fixed refinance:
Interest Rate Differential: The difference between your current rate and the new rate is the most critical factor. A larger gap leads to greater monthly savings and interest reduction. Even a small decrease can yield substantial savings over 30 years.
Current Loan Balance: A higher balance means larger potential savings in absolute dollar amounts, both monthly and in total interest.
Remaining Loan Term: Refinancing a loan with many years left offers more opportunity for savings than one nearing its end. However, extending the term (e.g., from 15 years to 30) will increase total interest paid, even with a lower rate.
Closing Costs: These upfront fees can negate savings if they are too high relative to the monthly payment reduction. A thorough analysis of closing costs versus savings is essential. This impacts the break-even point calculation.
Credit Score: A higher credit score typically qualifies you for lower interest rates, maximizing potential savings. A lower score might result in a rate that isn't low enough to justify refinancing.
Market Conditions & Economic Outlook: Broader economic factors, inflation expectations, and central bank policies influence prevailing mortgage rates. Refinancing is often more attractive when rates are trending downwards.
Home Equity: The amount of equity you have can affect your ability to get the best rates and terms, especially if you plan to do a cash-out refinance. Lenders assess Loan-to-Value (LTV) ratios.
Fees and Lender Policies: Different lenders have varying fee structures and requirements. Comparing loan estimates (LEs) is vital.
Frequently Asked Questions (FAQ)
Is it always a good idea to refinance to a 30-year fixed loan?
Not necessarily. While it often lowers monthly payments, it can increase the total interest paid over the loan's life due to the longer term. It's best if you need improved cash flow or if the rate reduction is substantial enough to offset the extended term. Use a 30-year fixed refinance calculator to compare scenarios.
What are typical closing costs for a refinance?
Closing costs can range from 2% to 6% of the loan amount. They include appraisal fees, title insurance, origination fees, recording fees, and more. Always get a Loan Estimate (LE) to see the exact costs.
How long does it take to break even on a refinance?
The break-even point is calculated by dividing the total closing costs by the monthly savings in principal and interest. A common goal is to break even within 3-5 years. Our calculator provides this figure.
Can I refinance if my home value has decreased?
Yes, but it might be more challenging. Lenders look at the Loan-to-Value (LTV) ratio. If your LTV is too high (meaning you owe more than the home is worth), you may not qualify or might face higher rates and fees.
What's the difference between refinancing to a 30-year fixed and a 15-year fixed?
A 30-year fixed typically has lower monthly payments but higher total interest paid over time. A 15-year fixed has higher monthly payments but significantly less total interest paid and builds equity faster. The choice depends on your financial priorities.
Should I roll closing costs into the new loan?
Rolling closing costs into the loan increases your principal balance and thus the total interest paid. It's often better to pay them out-of-pocket if you can afford it, especially if you plan to move or refinance again relatively soon. Our calculator helps assess this impact.
What is a cash-out refinance?
A cash-out refinance allows you to borrow more than your current mortgage balance and receive the difference in cash. This can be used for home improvements, debt consolidation, or other major expenses. The new loan amount will be higher, impacting payments and total interest.
How does my credit score affect my refinance rate?
Your credit score is a primary factor lenders use to assess risk. Higher scores (typically 740+) generally qualify for the lowest advertised rates, while lower scores may result in higher rates or denial. Maintaining a good credit history is crucial for favorable refinance terms.