Refinance Calculator
Unsure if you should refinance? Compare interest savings and equity gains against closing costs to make an informed decision.
Original Loan Details
Refinanced Loan Details
Fees and Points
Federal & State Income Taxes
Are You Itemizing Deductions?
Should You Refinance? Here Are Your Results
| Your Savings | Amount |
|---|---|
| Interest Savings Over 7 Years | $27,039 |
| Less Tax Deduction Lost | -$8,112 |
| Less Total Closing Costs | -$5,693 |
| Net Refinancing Benefit Over 7 Years | $13,234 |
| Monthly Payment Change | Pay $465/mo more |
| Break-Even Point | 1 years 6 months |
Complete Guide to Mortgage Refinancing
Refinancing replaces your existing mortgage with a new loan, typically to get a lower interest rate, change your loan term, or switch from an adjustable to fixed rate. According to the Consumer Financial Protection Bureau (CFPB), refinancing can save thousands over the life of your loan—but it's not always the right choice.
Refinancing: Pros and Cons
✓ Advantages
- Lower your interest rate and monthly payment
- Save thousands in total interest over loan life
- Switch from adjustable to fixed rate for stability
- Shorten your loan term to build equity faster
- Remove PMI if you've reached 20% equity
- Consolidate debt with a cash-out refinance
✗ Disadvantages
- Closing costs of 2-5% of loan amount
- Resets your amortization schedule
- May extend total time paying mortgage
- Requires good credit and equity for best rates
- Appraisal and inspection fees required
- Time and paperwork to complete the process
Types of Mortgage Refinancing
Rate-and-Term Refinance
The most common type. You replace your existing loan with a new one that has a different interest rate and/or term. No cash is taken out—the new loan simply pays off the old one.
Cash-Out Refinance
Borrow more than you owe and receive the difference in cash. Use our cash-out calculator to see how much you can access. Great for home improvements or debt consolidation.
Streamline Refinance
Available for FHA, VA, and USDA loans. Requires less documentation and may not need an appraisal. Check our FHA or VA calculators for eligibility.
Cash-In Refinance
You bring cash to closing to reduce your loan balance. This can help you reach 20% equity to eliminate PMI or qualify for a better interest rate.
Refinance Eligibility Requirements
Lenders evaluate several factors when you apply to refinance. Here's what you typically need:
| Requirement | Conventional | FHA Streamline | VA IRRRL |
|---|---|---|---|
| Credit Score | 620+ | 580+ (varies) | No minimum |
| Equity/LTV | ≤97% LTV | No maximum | No maximum |
| DTI Ratio | ≤43-50% | Not verified | Not verified |
| Appraisal | Required | Usually waived | Usually waived |
How to Use Your Calculator Results
This calculator compares your current loan against a potential new loan to show:
- Monthly Savings: The difference between your current and new payment. Even $100/month savings equals $1,200/year.
- Break-Even Point: How many months until your savings exceed closing costs. If you plan to move before this date, refinancing may not make sense.
- Total Interest Savings: The difference in total interest paid over the life of both loans. This is often the most compelling number.
- Net Benefit: After accounting for closing costs, tax implications, and time horizon, this shows your true savings.
Should You Refinance? Decision Guide
Consider refinancing if your results show:
- Rate reduction of 0.5%+: Even a half-point reduction can save significant money on a large loan balance.
- Break-even under 3 years: If you'll stay in your home longer than the break-even period, refinancing makes financial sense.
- Positive net benefit: After all costs, you come out ahead over your planned ownership period.
Consider alternatives if: You're close to paying off your mortgage, plan to move within 2-3 years, or can't qualify for a meaningfully lower rate.
Who Benefits Most from Refinancing?
- Rate drop beneficiaries: Homeowners who bought when rates were higher and can now qualify for significantly lower rates.
- ARM holders: Those with adjustable-rate mortgages nearing adjustment who want the stability of a fixed rate.
- Equity builders: Homeowners who want to switch from a 30-year to 15-year loan to pay off their home faster.
- PMI eliminators: Those who now have 20%+ equity and can refinance to remove private mortgage insurance.
Related Calculators
- Cash-Out Refinance Calculator — Calculate how much equity you can access
- Mortgage Calculator — Compare your current payment to potential new payments
- Extra Payments Calculator — Alternative to refinancing: see how extra payments can save interest
- HELOC Calculator — Consider a home equity line instead of cash-out refinance
Official Resources & Citations
- Consumer Financial Protection Bureau (CFPB) — What is a mortgage refinance?
- U.S. Department of Housing and Urban Development (HUD) — FHA refinancing programs
- U.S. Department of Veterans Affairs — VA Interest Rate Reduction Refinance Loan (IRRRL)