Mortgage Refinance Calculator

If refinancing will give you lower monthly payments or lifetime savings on mortgage interest, it’s most likely a good financial move — as long as you aren’t planning to sell the home before you break even on the refinance.

The boxes in our refinance calculator results show you at a glance where the refinance would save you money, and where it would cost you. Green results across the board are a great sign, but it’s okay if there’s some red sprinkled in. Just be sure you have a specific goal in mind for the refinance, and that the green results align with your needs.

How to evaluate your break-even point results

Once you’ve entered the information above, our refinance calculator will show you your break even point. Here’s how to evaluate the result:

1. Will you break even before you plan on moving? The refinance will pay for itself as long as you continue to own the home past the break-even point. If you aren’t planning to stay that long, it’s not going to be worth it to refinance.
2. Are the savings significant? Although you’ll have paid for the refinance as soon as you hit your break-even point, to start seeing significant savings you’ll need to continue to own the home well after breaking even. However, what’s significant to you is something only you can decide. That said, many homeowners won’t find refinancing worthwhile if they don’t remain in the home at least one full year past the break-even point.
3. What is your number one goal for this refinance? Make sure that your refinance loan will achieve your goals. If you’re unsure about what goals you can achieve, the next section lists some common ones.

Common reasons to refinance

Assuming you’ll break even, a refinance generally makes sense if:

• You can lower your interest rate. Besides the savings on your monthly payment, a lower rate can save you thousands of dollars in interest charges over the life of your loan.
• You want to pay off your loan faster. If you can swing the higher payment, switching from a 30-year to a 15-year mortgage means you’ll be mortgage-free much faster.
• You want to switch from an adjustable-rate mortgage (ARM) to a fixed rate. If your ARM rate is going to adjust soon, refinancing to a fixed-rate loan may give you peace of mind. It can also make budgeting easier, since you’ll know exactly what to expect each month.
• You want to tap some of your home equity. Converting some of your home equity to cash with a cash-out refinance can help you pay off credit card balances or make improvements that will increase your home’s value.
• You want to remove someone from the mortgage. If you’re going through a divorce and one party wants to remain in the house, you may need to remove the other from the mortgage. And while it’s theoretically possible to remove someone’s name from a mortgage without refinancing, it can be complicated. In most cases, a refinance is the simplest solution.
• You want to stop paying FHA mortgage insurance. If you currently have a mortgage insured by the Federal Housing Administration (FHA), you’re on the hook for annual FHA mortgage insurance premiums. The most common way to get out of this obligation is to refinance into a conventional loan.

Here’s a quick overview of how to refinance a mortgage:

1. Pick your financial goal. Do you want to alter your interest rate, loan term or both? Are you looking for lower payments or a faster payoff?
2. Decide on a loan program. Choose a government-backed refinance loan if you need to refinance with bad credit, or a conventional loan if you have a high credit score and more than 20% equity in your home.
3. Shop for a lender and lock your rate. Once you’ve reviewed loan estimates and chosen the best lender for your needs, ask your lender for a mortgage rate lock. Mortgage rates change daily and your rate isn’t guaranteed until it’s locked in.
4. Gather your financial paperwork. In most cases, you’ll need to provide documentation of your income, employment and debts. This usually means current pay stubs, W-2s and bank statements. You’ll also need information about the loan you’re paying off.
5. Get your home appraised. Your refinance lender will want to evaluate your home’s current value. So, unless you’re eligible for an appraisal waiver, you should spruce up your house in preparation for a home appraisal.
6. Finalize your closing disclosure and enjoy your savings. Once your loan is approved, you’ll receive a closing disclosure three business days before you sign. If everything looks correct, sign your papers and you’re all done. And if you change your mind, you can exercise your right of rescission, which gives you three days to cancel the mortgage contract.