Mortgage Refinance Calculator
Thinking about refinancing? Enter your new loan details to see your potential new monthly payment, then compare it against what you're paying now.
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When Does Refinancing Make Sense?
Refinancing typically makes sense when you can reduce your interest rate by at least 0.5–1%, you plan to stay in your home long enough to recoup the closing costs, or you want to switch from an adjustable-rate to a fixed-rate mortgage.
For example, refinancing a $320,000 loan from 7.5% to 6.5% saves roughly $213/month. If closing costs are $6,000, your break-even is about 28 months. Stay longer than that, and every month is savings.
The Break-Even Point
Your break-even point is how long it takes for monthly savings to cover your refinancing closing costs (typically 2–5% of the loan amount). If you plan to sell before break-even, refinancing may not save you money.
- Closing costs: typically $3,000–$6,000 on a $300K loan
- Monthly savings: difference between old and new payment
- Break-even months = Closing costs ÷ Monthly savings
Rate-and-Term vs Cash-Out Refinance
A rate-and-term refinance replaces your current mortgage with a new one at a lower rate or shorter term. A cash-out refinance lets you borrow more than you owe and take the difference in cash — useful for home improvements or debt consolidation, but increases your loan balance.
Refinance to a Shorter Term
If your financial situation has improved since you got your original mortgage, consider refinancing from a 30-year to a 15-year term. While your payment will be higher, you'll build equity faster and pay far less interest. On a remaining balance of $280,000, switching from 30-year at 7% to 15-year at 6.5% saves over $150,000 in total interest.
Costs to Watch For
- Origination fee — 0.5–1% of the loan amount, charged by the lender
- Appraisal fee — $300–$600, required to verify your home's current value
- Title insurance — $500–$1,500, protects the lender against title defects
- Prepayment penalty — some older loans charge 1–2% for early payoff; check your current terms
- Points — optional upfront payment (1 point = 1% of loan) to buy down your rate by ~0.25%
When NOT to Refinance
Refinancing isn't always beneficial. Avoid refinancing if you're planning to move within 2–3 years (you won't recoup closing costs), if your credit score has dropped significantly (you may not qualify for a better rate), if you're extending your term without a rate drop (you'll pay more interest overall), or if the rate difference is less than 0.5%.
Refinancing FAQ
How much does it cost to refinance?
Closing costs for refinancing are typically 2–5% of the loan amount. On a $300,000 loan, expect $6,000–$15,000. Some lenders offer "no-closing-cost" refinances, but they roll fees into a higher rate — you pay them over the life of the loan instead.
How often can I refinance my mortgage?
There's no legal limit on how often you can refinance, but most lenders require a "seasoning period" of 6–12 months between refinances. Each refinance has closing costs, so it only makes sense if the savings are substantial enough to cover them.
Does refinancing hurt my credit score?
Refinancing may cause a temporary 5–10 point dip from the hard credit inquiry. However, if you shop multiple lenders within a 14–45 day window, all inquiries count as one. The impact is usually minor and recovers within a few months.
Can I refinance with bad credit?
It's possible but more difficult. FHA Streamline refinances have relaxed credit requirements if you already have an FHA loan. VA Interest Rate Reduction Refinance Loans (IRRRL) also have simplified requirements. For conventional refinancing, most lenders want at least a 620 credit score.
Should I refinance from an ARM to a fixed rate?
If your ARM's fixed period is ending and rates are reasonable, switching to a fixed rate eliminates the risk of future rate adjustments. This is especially smart if you plan to stay in the home long-term. Compare the fixed rate you qualify for against your ARM's worst-case adjustment scenario.
What is a cash-out refinance and when does it make sense?
A cash-out refinance replaces your current loan with a larger one and gives you the difference in cash. It makes sense for home improvements that increase your home's value, consolidating high-interest debt, or funding major expenses. However, you're converting unsecured debt to debt secured by your home — proceed carefully.
How long does refinancing take?
A typical refinance takes 30–45 days from application to closing. Streamline programs (FHA, VA) can close in 2–3 weeks. Delays usually come from appraisals, title searches, or documentation issues. Having your paperwork ready upfront speeds the process.
Can I skip a mortgage payment when I refinance?
It feels like you skip a payment because mortgage interest is paid in arrears. When you close on a refinance mid-month, there's typically a 30–45 day gap before your first new payment. However, the skipped interest is rolled into your new loan balance — you're not actually saving money.