Refinance Calculator
Calculate how much you can save if you refinance your mortgage
Replacing your original mortgage with a new home loan is known as refinancing. This mortgage refinance loan could give you a shorter repayment term, a lower interest rate, or lower monthly payments. Although it can sound intimidating, refinancing often results in a more favorable financial situation.
How to use the mortgage loan refinance calculator
Begin by providing information on your current loan: Enter your remaining mortgage balance, your monthly payment, and current interest rate. (If your current loan is an adjustable-rate mortgage, use your current mortgage interest rate, but note that this calculator does not take future interest rate changes into account.)
Next, enter the information on a new refinancing loan: the loan amount, its interest rate, and the term in years. After entering the closing costs, make sure to note whether you’d like these costs financed into the loan – this will make your loan amount increase – or whether you plan to pay them upfront.
The calculator will show you a comparison between your current monthly payments and the refinanced payments, along with the total interest and principal costs over the life of the loan. It will also show you how many months it will take to recover your closing costs and break even on your refinancing.
What is mortgage refinancing?
There are many reasons to refinance by replacing your original mortgage with a new loan. If you have enough equity, you may be able to take cash out to use for other purposes. If you can afford a higher monthly payment, you may want to refinance to a shorter loan term to save thousands in interest.
However, the most common reason is to possibly obtain a lower interest rate and reduce your monthly payments. In this case, the decision to refinance should be based on lowering mortgage costs and breaking even in a reasonable amount of time.
What fees are associated with mortgage refinance?
Closing costs – sometimes called settlement costs – include costs such as:
- Fees paid to obtain a lower interest rate
- Origination fees paid to the lender to cover the process
- Home inspection or appraisal fees
- Deposits for escrow accounts, such as homeowners insurance and property taxes
- Real estate agent fees
Buyers typically pay 2% to 5% of the total loan amount toward these costs, with most of this covering the lender fees.
When should I consider refinancing my home?
Whether it’s a good time to refinance depends in part on your reasons for doing so: If interest rates have gone down, for instance, refinancing might be a good idea simply to save money in the long term – even a half-percent decrease in interest rate can make a big difference over a 15- or 30-year mortgage.
If you have an adjustable-rate loan, refinancing to a fixed-rate loan can provide more budget stability down the road.
Additionally, if you’ve accumulated any higher-interest debt since you bought your home, you might consider refinancing to consolidate and pay off that debt using your home equity.
When should I not consider refinancing my home?
If mortgage rates have risen since you bought your home and if its value has declined, speak with a loan officer before refinancing. Remember: The point is to obtain a more favorable financial outcome.
You may also need to have a certain credit score to qualify for refinancing, along with a lower debt-to-income ratio.
How should I start the refinance process?
Locate a mortgage lender. View our refinancing guide to help you prepare for what to expect every step of the way, from pre-approval to applying to underwriting and closing.
Mortgage terms to keep in mind
- Equity: The difference between the fair market value of the property and the amount still owed on the mortgage. Also called home equity.
- Payoff amount: The cash amount that will completely pay off your loan.
- Refinance: Paying off one loan with the proceeds from a new loan, using the same property as security. This may be done to receive more favorable rates, lower payments, or a decreased term. It may also be done to receive additional cash.
Looking for another term put in plain language? Visit the complete CrossCountry Mortgage Glossary.
Additional mortgage calculators
Buying or refinancing a home can be confusing – we want to make beginning the journey as simple as possible. We’ve developed easy-to-use tools that will help you compare your options, calculate your payment, see how much mortgage you can afford, understand your debt-to-income ratio, and discover answers to many of your homebuying questions.
Use our free, interactive calculators to start getting answers and take the next financial steps toward your goals:
