Refinance Calculator

Refinancing replaces your existing loan with a new loan, ideally at a lower interest rate or better terms. The primary motivations for refinancing include reducing your monthly payment, lowering your interest rate to save money over the loan term, changing your loan term (shortening to build equity faster or lengthening to reduce monthly obligations), or switching from an adjustable-rate to a fixed-rate loan for payment stability. Refinancing can save tens of thousands of dollars, but it's not always the right move—closing costs and your timeline in the property are critical factors.

The break-even point is the most important metric when evaluating refinancing. This is the number of months it takes for your monthly savings to equal the closing costs you paid upfront. For example, if refinancing costs $6,000 and saves you $200 monthly, your break-even point is 30 months (2.5 years). If you plan to stay in your home or keep the loan longer than 30 months, refinancing makes financial sense. If you might sell or move within 2 years, you'll lose money on the refinance. Use our Mortgage Calculator to compare different scenarios.

Closing costs for refinancing typically range from 2-5% of the loan amount and include appraisal fees ($300-500), origination or underwriting fees (0.5-1% of loan), title search and insurance ($700-1,000), credit report fees ($25-50), and recording fees ($50-250). On a $300,000 refinance, expect $6,000-$15,000 in closing costs. Some lenders offer "no-closing-cost" refinances where they cover the fees in exchange for a slightly higher interest rate—this can make sense if you don't plan to keep the loan long-term, but you'll pay more interest over time.

Interest rate reduction is the primary driver of refinancing savings. Even a 0.5-1% rate reduction can save significant money. On a $300,000 mortgage, refinancing from 6.5% to 5.5% saves approximately $190 monthly and $68,000 over 30 years. However, if you've already paid on your current loan for several years, refinancing to a new 30-year term extends your total repayment period. To avoid this, refinance to a term equal to or shorter than your remaining term—if you have 20 years left, refinance to a 20-year or 15-year loan to maintain or accelerate your payoff timeline. Compare true costs with our APR Calculator.

Cash-out refinancing allows you to borrow more than you owe and receive the difference in cash, using your home equity for renovations, debt consolidation, or other expenses. While this provides access to funds at relatively low interest rates, you're increasing your loan balance and extending your debt. Only pursue cash-out refinancing if the funds are for value-adding improvements or eliminating high-interest debt. Avoid using home equity for depreciating assets or lifestyle expenses—you're putting your home at risk and extending the time until you own it outright.

Your credit score significantly impacts refinancing rates. Lenders offer the best rates to borrowers with excellent credit (740+), while those with fair credit (620-679) face higher rates that may not provide meaningful savings. Before refinancing, check your credit score and address any errors or issues. Even improving your score by 50-100 points can reduce your rate by 0.5-1%, translating to thousands in savings. If your credit has improved significantly since your original loan, refinancing becomes more attractive as you'll qualify for better terms than when you first borrowed.