Home Loan Refinance Calculator: Should I Refinance? When Will I Break Even?

Home Loan Refinance Calculator Sign

This free online Home Loan Refinance Calculator will calculate the net effect of refinancing your home loan at a lower interest rate, a different term, or both.

The calculator includes a cash out option and a built-in feature to help you estimate the refinance mortgage closing costs (no closing costs, low, medium, and high settings).

Plus, unlike most other online mortgage refinancing calculators, the home-loan refinance calculator on this page will calculate how long you will need to stay in your refinanced mortgage for the lower interest rate savings to offset the cost of the new home loan (break-even point).

Finally, the calculator will even calculate the effect refinancing will have on your Loan-To-Value (LTV) ratio, and then estimate the expected change to your PMI (Private Mortgage Insurance) payment.

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Home Loan Refinance Calculator

Calculate the net effect of refinancing your home loan, including LTV and PMI changes and break-even point.

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Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Market value:Market value:Estimated market value:Optional: Estimated market value of home:

Optional: Estimated market value of home:

If you would like to include LTV (Loan to Value) and PMI (Private Mortgage Insurance) into the calculations, enter the estimated market value of your home.

If you're not sure what the market value is, check the property listings in your area to see what similar homes are selling for. If you're not concerned with LTV and PMI, leave the field blank.

Enter as a dollar amount, but without the dollar sign and any commas.

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PMI payment:PMI payment:Monthly PMI payment:Optional: Current monthly PMI payment:

Optional: Current monthly PMI payment:

If you entered a market value, and you are making a monthly PMI (private mortgage insurance payment), enter the monthly amount on this line.

If you are not required to make a PMI payment, leave the field blank.

Enter as a dollar amount, but without the dollar sign and any commas.

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Existing Mortgage Terms
Entry type:Entry type:Mortgage entry type:Mortgage entries will be based on:

Mortgage entries will be based on:

If you've been making regular scheduled payments, choose Original. Otherwise, if you've already been making extra or unscheduled payments, choose Current. The first four rows will change when you switch between Original and Current terms.

Principal:Original principal:Original home loan amount:Original home loan amount:

Original home loan amount:

Enter the dollar amount of the original home loan (principal borrowed). Enter as a dollar amount, but without the dollar sign and any commas.

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Rate:Interest rate:Original annual interest rate:Original annual interest rate:

Original annual interest rate:

Enter the annual percentage rate (APR) of the original house loan. Enter as a percentage, but without the percent sign.

%
# of years:Number of years:Original term in number of years:Original home loan term in number of years:

Original home loan term in number of years:

Enter the original repayment term of the house loan in number of years.

#
Pmts made:# payments made:Number of payments already made:Number of house payments already made:

Number of house payments already made:

Enter the number of monthly house payments you have already made on your existing home loan. If you have not made any payments at all, leave blank or enter a zero.

#
Refinancing Terms
Refi rate:Refinance rate:Refinance rate:Refinance rate:

Refinance rate:

Enter the refinance rate (APR) of the new house loan. Enter as a percentage, but without the percent sign.

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Refi years:Refinance years:Refinance term in number of years:Refinance loan term in number of years:

Refinance loan term in number of years:

Enter the refinance loan term of the new house loan in number of years.

#
Cash out:

Cash out:

If you plan to borrow cash (not recommended) in addition to paying off the existing mortgage balance, enter the cash-out amount in the field on this line, without the dollar sign. Otherwise, leave the field blank.

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Cash in:

Cash in:

If you would like to add a lump sum of cash to pay down the principal (perhaps to save you from having to pay PMI), enter the cash-in amount in the field on this line, without the dollar sign. Otherwise, leave the field blank.

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Refinance Closing CostsRefinance Closing CostsMortgage Refinance Closing CostsMortgage Refinance Closing Costs
Estimate:Estimate costs:Estimate closing costs:Estimate closing costs:

Estimate closing costs

To have the calculator estimate your closing costs for you, select either None (no closing costs, which is highly unlikely), Low, Medium, or High. Or select None if you would like to enter your own estimates.

Points:

Points:

Enter the points that will be assessed on the new mortgage. Enter as a percentage, but without the percent sign (for .015 or 1.5%, enter 1.5).

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Application:Application fee:Mortgage application fee:Mortgage application fee:

Mortgage application fee:

Enter the estimated mortgage application fee ($250 - $300). Enter as dollar amount, but without the dollar sign and any commas.

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Appraisal:Appraisal fee:Appraisal fee:Appraisal fee:

Appraisal fee:

Enter the estimated appraisal report fee ($300 - $600). Enter as dollar amount, but without the dollar sign and any commas.

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Document:Document fee:Document fee:Document fee:

Document fee:

Enter the estimated document fee ($200 - $500). Enter as dollar amount, but without the dollar sign and any commas.

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Legal:Legal fee:Legal fee:Legal fee:
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Inspection:Inspection fee:Inspection fee:Inspection fee:

Inspection fee:

Enter the estimated inspection fee ($175 - $300). Enter as dollar amount, but without the dollar sign and any commas.

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Survey:Survey fee:Survey fee:Survey fee:

Survey fee:

Enter the estimated survey fee ($125 - $300). Enter as dollar amount, but without the dollar sign and any commas.

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Credit report:Credit report:Credit report fee:Credit report fee:

Credit report fee:

Enter the estimated credit report fee ($15 - $30). Enter as dollar amount, but without the dollar sign and any commas.

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Title search:Title search:Title search fee:Title search fee:

Title search fee:

Enter the estimated title search fee ($200 - $400). Enter as dollar amount, but without the dollar sign and any commas.

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Title insure:Title insurance:Title insurance fee:Title insurance fee:

Title insurance fee:

Enter the estimated title insurance fee ($400 - $800). Enter as dollar amount, but without the dollar sign and any commas.

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Recording:Recording fee:Recording fee:Recording fee:

Recording fee:

Enter the estimated recording fee ($25 - $200). Enter as dollar amount, but without the dollar sign and any commas.

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Other costs:Other closing costs:Other closing costs:Other closing costs:

Other closing costs:

Enter the total of any other costs that will be assessed for the creation of the new mortgage, such as prepayment penalties, courier fees, etc.. Enter without the dollar sign and any commas).

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Add costs?Finance costs?Finance closing costs?Finance closing costs?

Finance closing costs?

If you would like to bundle all of the upfront financing points and fees into the new loan amount, move the switch to the "Yes" position. Otherwise if you will be paying cash for the points and refinancing costs, move the switch to the "No" position.

Results
Current pmt:Current payment:Current monthly payment:Current monthly principal and interest payment:

Current monthly principal and interest payment:

Based on your entries, this is the amount of your current monthly principal and interest (PI) mortgage payment. This does not include property tax, homeowner insurance, or PMI payments.

Payoff amt:Payoff amount:Current mortgage payoff amount:Current mortgage payoff amount:

Current mortgage payoff amount:

Based on your entries, this is how much you still owe (principal balance) on your home loan after deducting all of the principal payments you have already made.

Points:Loan origination:Loan origination fee:Loan origination fee:

Loan origination fee:

Based on your entries, this is total product of your refinanced loan balance times the loan origination percentage points.

Total other:Total other fees:Total of other loan fees:Total of other loan fees:

Total of other loan fees:

Based on your entries, this is total of all flat loan fees (not based on a percentage).

Total costs:Total closing costs:Total closing costs:Total closing costs on new mortgage:

Total closing costs on new mortgage:

Based on your entries, this is total of your points paid plus all other closing costs.

New amt:New amount:New mortgage amount:New mortgage amount:

New mortgage amount:

Based on your entries, this is the loan amount the calculator will use for the new mortgage amount. If you chose to include the closing costs in the loan amount, this result will be the combined total of your existing mortgage balance, plus the calculated closing costs. The amount also reflects any cash-out or cash-in amounts you entered.

Offset mos:Offset months:Months till savings offsets costs:Months till refinance savings offsets closing costs:

Months till refinance savings offsets closing costs:

Based on your entries, this is how many months you will need to stay in your refinanced mortgage before the refinance savings will offset the cost of obtaining the new mortgage (closing costs).

Comparison Results
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pare
CompareComparisonComparison
Current
Mortgage
Current
Mortgage
Existing
Mortgage
Existing
Mortgage
Refi
Mortgage
Refi
Mortgage
Refinanced
Mortgage
Refinanced
Mortgage
Refi
+/-
Refi
+/-
Refinance
+/-
Refinance
+/-
Pmt:Pmt:Payment:Monthly Payment:

Monthly payment row:

This row shows your current principal and interest payment, the refinanced principal and interest payment, and a column containing the difference between the two monthly payments. A plus sign (+) indicates a payment increase, whereas a minus sign (-) indicates a payment decrease.

Cost:Cost:Net cost:Net cost:

Net cost row:

This row shows the total of the remaining interest costs on your existing mortgage, the interest costs plus closing costs of the refinanced mortgage, and a column containing the difference between the two net-costs. A plus sign (+) indicates a cost increase, whereas a minus sign (-) indicates a cost decrease. Note that Net Costs does not account for changes in PMI.

LTV:LTV:Loan to Value:Loan to Value:

Loan to Value (LTV):

If you entered a market value, this row will show your current LTV ratio, the refinanced LTV ratio, and a column containing the difference between the two LTV ratios. A plus sign (+) indicates a LTV increase, whereas a minus sign (-) indicates a LTV decrease. LTV ratios greater than 80% will likely require that you purchase Private Mortgage Insurance (PMI).

PMI:PMI:PMI pmt:PMI payment:

Private Mortgage Insurance (PMI):

If you entered a market value, this row will show your estimated current monthly PMI (Private Mortgage Insurance) payment, the refinanced PMI payment, and a column containing the difference between the two PMI payment amounts. A plus sign (+) indicates a PMI increase, whereas a minus sign (-) indicates a PMI decrease.

PIP:PIP:PIP pmt:PIP payment:

Monthly Principal, Interest, PMI payment (PIP):

If you entered a market value, this row will show your estimated current monthly Principal, Interest, and PMI payment (PIP), the refinanced PIP payment, and a column containing the difference between the two PIP payment amounts. A plus sign (+) indicates a PIP increase, whereas a minus sign (-) indicates a PIP decrease.

If you would like to save the current entries to the secure online database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Help and Tools

Learn

A lower monthly payment doesn't necessarily mean you will save money by refinancing.

What Does "Refinance" mean?

In case you're not familiar with the term, Refinance (Refi for short) basically means to replace an existing loan with a new loan. The new loan pays off the existing loan, leaving with you with one or more new terms (principal, interest rate, payment amount, and/or the number of payments).

Sounds simple enough, right?

Well, it would be if it wasn't for the fees.

Mortgage Refinancing Fees

Like most of their other high-profit products, lenders have done everything they can to complicate what would otherwise be a very simple decision. Lenders know consumers are only interested in who offers the lowest rates, so they lower their rates and make up the difference by charging a highly imaginative list of different loan fees (refer to the full refinance calculator on this page for a list and estimates).

Making matters worse, no two lenders have the same fee schedule. Not only does this make cost-estimation and rate comparisons anything but simple, but it also prevents me from being able to give you the exact cost of the fees. Instead, all I can offer is an estimation.

Average Closing Costs

Based on my research, the average refinancing closing costs charged by lenders can run between 3% and 6% of the refinanced loan balance.

To help you to put that in perspective, enter the current balance owed on your existing mortgage into the mini calculator below:

Average Mortgage Closing Costs Calculator
Enter your mortgage balance:
Estimate closing costs (3%-6%):$0 - $0
If added to loan balance (30 years at 6%):$0 - $0

As you can see from the results, you will need to refinance at a rate low enough to more than offset the cost of the fees to realize any actual savings. And when I say "savings", I'm talking about real savings, not reduced payment savings.

When Are Refinance "Savings" Truly Savings?

If you have used mortgage-refinance calculators on other web sites, you may have noticed that some only return the difference between your existing house payment and the refinanced house payment. And if the refinanced house payment is lower, you will often see the calculated difference, followed by the statement, "Monthly Payment Savings."

There's only one problem. Unless the total cost of refinancing (interest plus closing costs) is less than the cost of not refinancing, the term "savings" cannot and should not be used in the results.

If you refinance at a lower rate but extend the payoff period out longer than the existing loan term, there's a good chance that refinancing will actually end up costing you more money, as opposed to "saving" you money.

So please, just because the refinanced house payment is lower than your current payment, DO NOT ASSUME YOU WILL BE SAVING MONEY BY REFINANCING.

And if you happen upon a refinance calculator that does not calculate and compare the long-term costs of refinancing, I suggest you do your calculating elsewhere.

Why Refinance a Mortgage?

While their are many reasons to consider, here are some of the most common reasons for refinancing a mortgage:

  • To get a lower rate: If interest rates have dropped, or your credit score has improved (qualifying you for a lower rate).
  • To get a shorter term: If you'd like to pay your mortgage off ahead of schedule without incurring prepayment penalties.
  • To cash out some of your equity: If you'd like to borrow money at mortgage interest rates instead of at consumer loan rates (not recommended).
  • To get a lower payment: If a lower interest and/or a longer repayment term will make the payments more affordable.

Of course, mortgage lenders will likely tell you the best reason for refinancing is so you can lower your payment amount, so you can have more money to spend on fun things and activities. However, as noted earlier, if you're not careful, a lower payment now can cause you to have less "fun money" in the future ... much less!

Should I Refinance My House?

In my opinion, you should only refinance if your existing mortgage is fairly recent (most interest is paid in the early portion of the repayment term), and if doing so will save you money in the long run.

But what if you can't afford the size of your current monthly mortgage payment? Then you probably bought more house than you could actually afford (check the House Affordability Calculator to see if that might have been the case.)

Most people I know would be far better off if, instead of refinancing, they sold their over-sized home and purchased a more practical size home -- financed at the lower rate.

And by practical size, I mean a less expensive home that has lower property tax, insurance, utility, and maintenance costs. But no one wants to hear that. It seems most would rather live in their dream homes even if it means struggling to pay the nightmare payment and expenses.

In any case, if you have the opportunity to refinance at terms that will reduce your overall cost of repaying the home loan (including closing costs), I would proceed, but with the utmost caution. Why? Because ...

Loan Officers Don't Get Bonuses for Saving You Money

If you have determined that refinancing your existing mortgage will save you money in the long run, make sure you request a detailed breakdown of all upfront costs, along with an amortization schedule showing principal and interest breakdown and totals. Also be sure to get a copy of the loan agreement, along with a magnifying glass to make sure you can scour every word of the fine print.

Be especially watchful for any verbiage related to "prepayment penalties," as some mortgage companies will offer you low, or no-cost refinancing, but often at the expense of higher interest rates and stiff prepayment penalties that will prevent you from getting a cheaper loan at a later date.

How To Refinance Your House

If you are serious about refinancing, here the the steps I recommend:

  1. Read A Consumer's Guide to Mortgage Refinancings: This guide is located on the Federal Reserve Board's website, but refers readers to the Consumer Financial Protection Bureau for recent regulatory changes, as well as additional information about shopping for and using consumer financial products.
  2. Research your home's current market value: If your market value has increased, thereby lowering your Loan-To-Value ratio, refinancing may allow you to eliminate Private Mortgage Insurance (PMI).
  3. Find out your credit score: Lenders will want to know your credit score before they will quote you a rate. The lower your credit score, the lower the interest rate you will qualify for.
  4. Shop for the best rate: Start with your current lender as they may be able to offer you discounted closing costs (no appraisal, etc.). Always request a firm estimate of the loan fees from those lender's offering the best rates (do so sparingly, as a sudden jump in the number of credit checks might have adverse effects on your credit score). This is to ensure lower rates or closing costs aren't being offset by higher fees.
  5. Gather all data about your current mortgage: Find out your current payoff, principal and interest payment, interest rate, PMI payment, and prepayment penalty (if any), then use the refinance mortgage comparison calculator on this page to see if refinancing will end up saving you money for as long as you plan to stay in your present home.
  6. Weigh refinancing against principal prepayment: Use the extra payment mortgage calculator to see if making extra principal payments can achieve the same or better savings than refinancing.
  7. Contact the chosen lender: If the calculations indicate refinancing will generate savings over and above the costs, contact the lender you decided on during step #4 and tell them you are ready to start the process.

Adjust Calculator Width:

Move the slider to left and right to adjust the calculator width. Note that the Help and Tools panel will be hidden when the calculator is too wide to fit both on the screen. Moving the slider to the left will bring the instructions and tools panel back into view.

Also note that some calculators will reformat to accommodate the screen size as you make the calculator wider or narrower. If the calculator is narrow, columns of entry rows will be converted to a vertical entry form, whereas a wider calculator will display columns of entry rows, and the entry fields will be smaller in size ... since they will not need to be "thumb friendly".

Show/Hide Popup Keypads:

Select Show or Hide to show or hide the popup keypad icons located next to numeric entry fields. These are generally only needed for mobile devices that don't have decimal points in their numeric keypads. So if you are on a desktop, you may find the calculator to be more user-friendly and less cluttered without them.

Stick/Unstick Tools:

Select Stick or Unstick to stick or unstick the help and tools panel. Selecting "Stick" will keep the panel in view while scrolling the calculator vertically. If you find that annoying, select "Unstick" to keep the panel in a stationary position.

If the tools panel becomes "Unstuck" on its own, try clicking "Unstick" and then "Stick" to re-stick the panel.