Refinance Calculator

Refinancing your mortgage means replacing your current home loan with a new one, typically to get a lower interest rate, change loan terms, or tap into home equity.

When to Refinance

• Interest Rates Drop: Generally refinance if you can reduce rate by 0.5-1%
• Improved Credit: Better credit score may qualify for lower rates
• Change Loan Term: Switch from 30-year to 15-year to save on interest
• Remove PMI: If home equity is above 20%, refinance to eliminate PMI
• Cash-Out Refinance: Access home equity for major expenses

Types of Refinancing

• Rate-and-Term: Change interest rate or loan term without taking cash out
• Cash-Out: Borrow more than you owe and receive difference in cash
• Cash-In: Pay down principal to get better rate or eliminate PMI
• Streamline: Simplified process for FHA, VA, or USDA loans

Refinancing Costs

• Application Fee: $75-$300
• Origination Fee: 0.5-1% of loan amount
• Appraisal: $300-$700
• Title Search & Insurance: $700-$900
• Total Closing Costs: Typically 2-5% of loan amount

Break-Even Analysis

• Break-even point = Closing costs ÷ Monthly savings
• If you plan to stay in home beyond break-even, refinancing may make sense
• Consider your timeline before refinancing
• Factor in tax implications and opportunity costs

Common Mistakes to Avoid

• Extending Loan Term: May increase total interest paid
• Ignoring Closing Costs: Can take years to recoup
• Not Shopping Around: Compare multiple lender offers
• Refinancing Too Often: Reset amortization schedule each time
• Cashing Out Too Much: Reduces equity and increases debt