Mortgage refinance calculator

Should you refinance?

If you’re not sure refinancing is in your best interest, a mortgage refinance calculator can help.

By comparing your existing loan to a new one, you can gauge what the move would mean for your monthly payment, your payoff timeline, and the total interest you’ll pay in the long run.

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Learn more about mortgage refinancing

By Chris Jennings

As a Credible authority on mortgages, Chris Jennings covers topics including home loans and mortgage refinancing. His work has appeared in Fox Business and GOBankingRates.
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How to use our mortgage refinance calculator

Our mortgage refinance calculator will reveal a few things: How your old loan payment compares to your new one, how much interest you’ll pay over time, and the point at which you’ll break even on the costs of refinancing (that is, when you’ll start saving more than you spent).

To use the calculator, you’ll need the following information:

Current loan information

  • Original loan amount: The amount you borrowed when you initially took out your loan.

  • Original loan term: Your loan’s repayment period, expressed in years.

  • Current interest rate: How much you pay in interest on your loan. You should be able to find it on your original loan estimate or closing papers if you’re not sure.

  • Remaining term: How many years you have left in your repayment period, expressed in years.

Proposed loan information

  • New interest rate: How much you’ll pay in interest on your new loan. If you’re not sure what your new rate will be, use Credible to see refinance rates from several lenders at once.

  • New loan term: Your new loan’s repayment period, expressed in years.

  • Cash-out refinance: Indicate whether or not you’ll be doing a cash-out refinance. If you are, enter the amount of equity you plan on taking out in this field. You’ll also need to enter your home’s estimated value in the next field.

  • Home value: Your home’s current value. In many cases, your lender will ask you to get a home appraisal to determine the value of your home before approving your new loan.

  • Closing costs: Total amount of closing costs you’ll pay with the new loan. Mortgage closing costs can range from 2% to 5% of the loan amount, averaging about $5,000.

Why should you refinance your mortgage

There are several reasons why you might want to refinance your mortgage loan, including:

  1. To save on interest: Mortgage rates are at record lows right now. If you’re able to refinance to a lower interest rate than what’s on your current mortgage, it could save you thousands of dollars over the loan term.

  2. To pay off your loan sooner: Refinancing into a shorter-term loan can be smart, too. By going from a 30-year term to a 15- or 20-year one, for example, you could shave years off your payoff timeline and reduce the interest you pay in the long run.

  3. To change your loan type: You might also consider refinancing if you have an adjustable-rate loan. Refinancing into a fixed-rate mortgage would protect you from any rate increases and give you an affordable, consistent payment for the remainder of your loan.

Keep Reading: How to Refinance Your Mortgage in 6 Easy Steps

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How to decide if you should refinance

This calculator can help you decide if refinancing makes sense for your current situation. Be sure to cover the following steps before applying for a refinance:

Compare your monthly payments
See what your monthly payment would be on your new loan versus your old one. If it could free up cash flow or ease your household’s financial burden, it might be a smart move.

See how much interest you’re paying
A lower interest rate or shorter loan term will reduce the amount of interest you’ll pay in the long run (there’s less time to accrue interest on the latter). Compare how much you’d pay in interest over your loan term on both your old mortgage and new mortgage. The savings could be big.

Figure out your breakeven point
The breakeven point is when the savings of your refinancing equal or outweigh its costs. On this calculator, you’ll see it displayed as years. Generally, it only makes sense to refinance if you know you’ll be in the home at least that many years — ideally longer.

See more rates: 15 Year Fixed Refinance Rates

How to refinance your mortgage

When you refinance your mortgage, you’ll go through a process similar to the one you went through when purchasing your home. Here are the steps you can expect to take to refinance your home loan:

  1. Set a goal: Ask yourself why you’re refinancing in the first place. Is it to get a better mortgage rate? To access your home equity? Maybe both? Setting a clear goal will put things into focus for the rest of the process and help determine the best refinance loan for you.

  2. Review your financials: You’ll want to ensure your credit score and debt-to-income (DTI) ratio are within lenders’ desired range. To qualify for the lowest rates, lenders generally want you to have an excellent credit score (750 or higher) and a DTI ratio of less than 36%. Make sure your income is stable as well.

  3. Compare refinance rates and fees from different lenders: Even a small difference in interest rates can equal thousands of dollars in savings. It’s important to shop around and compare lenders for the lowest rate. If you’re doing a cash-out refinance, find out how much equity the lender will allow you to borrow. Most lenders only allow you to borrow up to 80% of your home equity.

  4. Prepare your documents: Once you’ve found the right loan and lender, you’ll want to gather all of the necessary documents to streamline the application process. In general, you can expect to provide tax returns and W-2s from the last two years, pay stubs and bank statements from the last two months, proof of homeowners insurance, and asset statements (e.g., retirement accounts and brokerage accounts).

  5. Apply for the loan: Submit your documents to your lender to complete the application process. You should receive a loan estimate within three business days of applying. Your loan estimate shows key information pertaining to your loan, such as the loan amount, interest rate, and closing costs.

  6. Get a home appraisal: Your lender will most likely require you to get a home appraisal as part of the underwriting process to determine how much your home is worth.

  7. Go through underwriting: The time to refinance a mortgage varies depending on the lender and current market conditions, but it’s usually the lengthiest step in the refinancing process. Your lender might be able to close in just a few weeks; it’s more common, though, for the process to take anywhere between 30 to 60 days.

  8. Close the loan: On closing day, you’ll meet with your lender, review your new loan term, and sign the paperwork to make everything official. If you’re doing a cash-out refinance, you’ll receive the funds from your lender after you close the loan.

If you’ve done your research and believe refinancing is the right move, start comparing your options right away. Mortgage rates change daily and vary by lender.

To make sure you’re getting a great rate, use Credible and compare personalized rates from our partner lenders before moving forward with your full application.