Find out if refinancing your mortgage saves you money. Compare your current mortgage vs new refinance rates to calculate monthly savings, break-even point, and total interest saved. Free, instant, no signup required.
Typically 2-5% of loan amount ($5,600 - $14,000)
Mortgage refinancing means taking out a new home loan to pay off your existing one. If rates are lower, you can cut your monthly payment, reduce total interest, or pay off your loan faster.
Refinance when rates drop by 0.5-1%, you plan to stay past the break-even point (typically 2-4 years), and closing costs can be recouped through monthly savings.
Closing costs typically run 2-5% of the loan amount. Factor in appraisal fees ($300-500), origination fees (0.5-1%), title insurance, and prepaid items like property taxes.
Shop at least 3-5 lenders, check your credit score first (740+ gets best rates), consider shorter terms to save on interest, and lock your rate when you find a good deal.
| Situation | Refinance? |
|---|---|
| Rate drops by 1%+ and you stay 5+ years | ✓ Yes — strong case |
| Rate drops by 0.5% and you stay 3+ years | ✓ Likely yes |
| You plan to move within 2 years | ✗ Usually no |
| Closing costs exceed 5 years of savings | ✗ Reconsider |
| Switching ARM → fixed for stability | ✓ Yes — protects you |
| Resetting to 30 yrs when you have 10 left | ✗ Run the numbers first |
Mortgage refinancing is the process of replacing your current home loan with a new one, typically to take advantage of lower interest rates, reduce monthly payments, or change loan terms. Our mortgage refinance calculator helps you determine if refinancing makes financial sense for your situation.
When mortgage rates drop, refinancing can save you thousands of dollars over the life of your loan. However, it's important to factor in closing costs, which typically range from 2-5% of the loan amount. The break-even point — when your monthly savings offset the closing costs — is crucial in deciding whether to refinance.
The traditional rule of thumb is to refinance when you can drop your rate by at least 1%. However, this depends on several factors including how long you plan to stay in the home, your remaining loan balance, and current closing costs. Even a 0.5% rate reduction can be worthwhile if you have a large loan balance and plan to stay in your home for several years.
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A homeowner in Texas with a $320,000 balance at 7.5% refinances to 6.1% on a new 30-year loan.
Saved every month
That's $97,560 saved over 30 years — minus closing costs of ~$8,000, they break even in just 29 months.