Should I Refinance? Calculate Your Savings
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Full Loan Comparison
| Metric | Current LoanCurrent | New LoanNew | DifferenceDiff |
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| Interest Rate | — | — | — |
| Monthly Payment (P&I) | — | — | — |
| Loan Term Remaining | — | — | — |
| Total Interest Cost | — | — | — |
| Total Cost (Interest + Balance) | — | — | — |
| Year | Principal | Interest | Balance |
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Disclaimer: Results are estimates for educational purposes only and do not constitute financial advice. Actual savings depend on your credit score, lender fees, prepaid interest, and local costs. Consult a licensed mortgage professional before refinancing.
How to Use This Refinance Calculator
Enter your current loan balance, the interest rate and remaining term on your existing mortgage, and the new rate you've been quoted. Add estimated closing costs (typically 2–5% of your loan balance). The calculator shows your monthly savings, break-even point, and total interest saved over the life of the loan.
What Is the Break-Even Point?
The break-even point is the number of months it takes for your monthly savings to recoup the closing costs you pay upfront. It is the single most important number in a refinance decision.
Example: $8,000 closing costs ÷ $200/month savings = 40 months (3.3 years)
If you plan to stay in the home longer than the break-even period, refinancing saves you money. If you plan to move before the break-even, you will lose money on the transaction even if the rate is lower.
The "1% Rule" for Refinancing
A common guideline is that refinancing makes sense when you can lower your rate by at least 1 percentage point. This is a useful starting heuristic, but the break-even calculation is more accurate — a 0.5% reduction on a $500,000 loan may pay off faster than a 1.5% reduction on a $100,000 loan, depending on closing costs.
Rate-and-Term vs. Cash-Out Refinance
A rate-and-term refinance replaces your existing loan with a new one at a lower rate or shorter term, with no change in loan balance. A cash-out refinance adds to your balance — you borrow more than you owe and receive the difference in cash. Use the "Cash-Out Amount" field above for cash-out scenarios. Note that cash-out refis typically carry slightly higher rates than rate-and-term refis.
How Closing Costs Are Estimated
Refinance closing costs typically run 2–5% of the loan balance. Common line items include: loan origination fee (0.5–1%), appraisal ($300–$700), title insurance ($500–$2,000), title search ($150–$400), recording fees ($25–$250), and prepaid interest (3–14 days of interest depending on closing date). Some lenders offer "no-closing-cost" refis that roll costs into the rate — compare carefully using this calculator.
Frequently Asked Questions
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