Use the mortgage refinance calculator above to compare your current loan with potential refinance options. Enter your remaining balance, current rate, and new loan terms to see monthly savings, break-even points, and total interest differences. The results will help you determine if refinancing makes financial sense for your situation.

How Mortgage Refinance Savings Are Calculated

The calculator compares two key scenarios: your existing mortgage versus a refinanced loan. It uses this basic formula:

• Monthly Savings = (Current Payment) – (New Payment)
• Break-Even Period = (Closing Costs) ÷ (Monthly Savings)
• Total Interest Savings = (Remaining Interest on Current Loan) – (Total Interest on New Loan)

Key inputs include your remaining loan balance, current interest rate, new rate estimate (typically 0.5%-2% lower for worthwhile refinancing), and loan term. Closing costs usually range from 2%-5% of the loan amount.

What Affects Your Refinance Payment

• Interest Rate Difference: A 1% rate drop on a $300,000 loan saves ~$180/month
• Loan Term: Extending to 30 years lowers payments but increases total interest
• Closing Costs: Points, appraisal fees, and title insurance (typically $4,000-$10,000)
• Equity Position: <80% LTV avoids PMI; <60% may qualify for best rates
• Loan Type Changes: Switching from ARM to fixed-rate eliminates future rate hikes

Tips to Lower Your Refinance Payment

• Improve Your Credit Score: Rates for 740+ scores are typically 0.25%-0.5% better than 680-719
• Shop Multiple Lenders: Compare at least 3 Loan Estimates to negotiate fees
• Consider a Break-Even Analysis: Don’t refinance if moving before recouping costs
• Opt for Lender Credits: Accept slightly higher rates to reduce upfront fees
• Time Your Refi: Rates often dip during slower winter months

Common Questions

How much lower should rates be to justify refinancing?

The traditional “rule of thumb” suggests at least a 0.75%-1% rate reduction, but this depends on your closing costs and how long you’ll keep the home. Use the calculator’s break-even analysis for your specific scenario.

Are refinance rates higher than purchase rates?

Yes, typically by 0.125%-0.25%. Lenders view refinances as slightly riskier because existing homeowners are more likely to default than buyers making new purchases.

Can I refinance with less than 20% equity?

Yes, but you’ll likely pay PMI (if conventional) or face higher FHA MIP rates. Some lenders offer “no-PMI” loans but charge higher interest instead.