Mortgage Refinance Calculator

How to use this refinance calculator

Enter your current loan as it was when you took it out, plus how many payments you've made. The calculator works out today's balance from that. Then enter the new rate, term and costs a lender quoted you, and how long you expect to keep the new loan. It tells you whether refinancing comes out ahead over that time, after every cost.

• Current loan. The original amount, rate and term, and the number of payments made so far.
• New loan. The rate and term on the Loan Estimate, plus points, the origination fee and other closing costs. Appraisal, title and recording fees go in other closing costs.
• Years until you sell or refinance again. The most important input. Refinancing has a cost up front and saves money over time, so the answer depends on how long you'll keep the loan.

How the calculator decides

It compares two futures over the time you'll keep the loan: keeping your current mortgage, or refinancing. For each one it adds up every payment you'd make and the balance you'd still owe at the end. Refinancing wins when its payments plus its ending balance plus its closing costs come to less.

Counting the balance matters. A new 30-year loan lowers the payment partly by starting the clock over, so less of each payment goes to principal. Looking only at the monthly savings can make a refinance look better than it is, or a shorter-term refinance look worse.

A worked example

You borrowed $300,000 at 7.5% for 30 years and have made 36 payments. A lender offers 6.25% for 30 years with a 1% origination fee and $3,000 of other costs. You expect to stay 7 years.

The quick rule of thumb, closing costs divided by monthly savings, gives 20 months here, which matches because both loans run 30 years. It's the starting point, not the whole story: if you sold after just one year, refinancing would cost you $2,293.

How the offer changes the answer

Same loan and the same 7-year stay unless noted:

The 15-year loan raises the payment by $397.83 a month, yet it comes out furthest ahead, because the balance falls much faster. Paying a point for a lower rate helps only if you keep the loan long enough; the mortgage points calculator shows where that line is.

What refinancing costs

Closing costs on a refinance often run 2% to 5% of the loan. They usually include:

• Origination or underwriting fees charged by the lender.
• Points, if you choose to buy the rate down. One point is 1% of the loan.
• Appraisal, title insurance, recording and credit report fees.
• Prepaid interest and a new escrow deposit. These aren't true costs, since you'd pay taxes and insurance anyway, and your old escrow balance is refunded.

A "no-closing-cost" refinance still has costs. They're paid through a higher rate or added to the loan. Enter them as you'd actually pay them to see the real trade-off.

When refinancing makes sense

• You'll stay past the break-even point, with room to spare in case plans change.
• The rate drop is large enough to cover the costs. The old rule was a full point; with low closing costs, less can work. The table above shows why the size of the drop matters so much.
• You want to change the loan itself: leave an adjustable rate, drop FHA mortgage insurance by moving to a conventional loan, shorten the term, or take cash out. For cash out, use the cash-out refinance calculator.

To compare two lenders' offers with different rates and fees, try the which loan is better calculator. Our sister site MortgageRefinance.com has more on the refinance process.

Frequently asked questions

Results are estimates for planning. They aren't an offer of credit or financial advice.