Mortgage Refinance Calculator

A mortgage refinance calculator can help you compare your existing loan to a new one. Gauge what refinancing would mean for your monthly payment, your payoff timeline, and the total interest you’ll pay in the long run.

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.
• 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.

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.

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 for at least that many years — ideally longer.

See more rates: 15-Year Fixed Refinance Rates

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 about 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.

FAQ

What is a mortgage refinance?

A mortgage refinance is when a homeowner replaces their current mortgage loan with a new loan that has a more favorable interest rate and/or term. Some homeowners borrow just enough to pay off their current loan; others borrow more than they owe so they can both repay their original loan and “cash out” some equity. In either case, the refinance loan is a new first mortgage that pays the old first mortgage in full.

How much does a mortgage refinance cost?

A mortgage refinance is a new first mortgage, so you’ll pay many of the same closing costs you paid with your current mortgage loan. Those fees usually total between 2% and 6% of your loan amount, and they may include:

• Loan application
• Credit report
• Survey, if the lender requires it
• Appraisal, if the lender requires it
• Loan origination
• Loan underwriting
• Mortgage points, if you’re prepaying interest
• Mortgage insurance, if you’re refinancing more than 80% of the home’s value
• Property tax and homeowners insurance escrow
• Title search and title insurance
• Recording with the county or other jurisdiction

You won’t necessarily pay all of these fees. For example, your lender might forgo a survey if you haven’t made improvements that could violate zoning rules since you took out your current mortgage loan.

An appraisal also might be unnecessary, especially if you’re refinancing the same type of loan and you’re not cashing out equity.

How do I qualify for a mortgage refinance?

The specific qualifications you’ll need for a refinance depend on the lender, your current loan type, and the type of loan that you’re refinancing. Requirements for cash-out refinances are more strict than requirements for rate-and-term refinances.

Lenders consider the following when evaluating an application for a refinance loan:

• Credit score and credit history: Depending on the loan type, the minimum credit score to refinance could be anywhere from 500 for some FHA loans to over 700 for a jumbo mortgage loan.
• Debt-to-income ratio (DTI): The lender will ask you for tax returns, pay stubs, W-2 forms, and other documentation of your income. An ideal DTI is 36% or less.
• Loan-to-value ratio: Whether by appraisal or other means, the lender will determine how much your home is worth so it knows the maximum you can borrow. Acceptable conventional loan-to-value ratios are 95% for a no-cash-out refinance and 80% for a cash-out refinance.

Some refinance loans also require that you or another borrower have lived in the home as your primary residence for some period of time, such as six or 12 months.

What credit score do I need to get a mortgage refinance?

The minimum credit score needed to refinance your mortgage depends on the type of refinance loan and the lender. Some loan programs, including the VA, have low or no credit score requirements, but lenders usually establish their own.

Here are the scores you’ll typically need for common refinance loan types:

• Conventional loan: 620
• Jumbo loan: 700
• FHA loan: 500
• VA loan: 580 to 640, depending on lender
• USDA loan: Up to 620, but a credit review is not always required

What are the main types of mortgage refinance loans?

Refinance loans fall under two main categories:

• Cash-out: If you have enough equity, you can borrow more than you need to pay off your existing loan and take the excess funds in cash at closing.
• Rate-and-term: You replace your current mortgage loan with a new loan that has a more favorable interest rate and/or term.

Each type of refinance loan falls within one or both of these categories.

Conventional mortgage refinance loans

Conventional refinance loans have cash-out and rate-and-term options. These refi loans, which are backed by Freddie Mac or Fannie Mae, include special refinance programs for low- and moderate-income borrowers and those who lack the equity to qualify for a standard refinance loan. You can refinance from any type of mortgage loan to a conventional loan as long as you meet the requirements.

VA mortgage refinance loans

The VA guarantees two types of refinance loans for borrowers who already have a VA mortgage loan. In addition to a cash-out refinance, it offers a rate-and-term option called an interest rate reduction refinance loan, or IRRRL, also known as a “streamline refinance loan”.

FHA refinance loans

FHA refinances typically come in two forms: FHA-to-FHA refinance or conventional refinance, and you can opt for a cash-out, rate-and-term, or no-cash-out loan.

An FHA Streamline rate-and-term refinance loan is available to current FHA borrowers. It offers an expedited underwriting process with no appraisal and allows the borrower to draw up to $500 in cash at closing. A simple refinance, which is also for current FHA borrowers only, is also a rate-and-term loan, but it requires an appraisal.

USDA refinance loans

USDA-guaranteed mortgage loans can be refinanced using streamlined or non-streamlined loans. The non-streamlined options allow you to borrow the full value of the home plus fees and closing costs. Streamlined loans allow you to roll closing costs and fees into your new loan, and in the case of a streamlined-assist loan, add a borrower.

USDA refinance loans are rate-and-term only.

What are the pros and cons of refinancing?

Under the right circumstances, refinancing is a smart financial move. But it also has drawbacks you should consider.

Pros

• A rate-and-term refinance can save you money on interest and/or make your payments more affordable.
• Funds from a cash-out refinance can pay for home repairs and improvements or consolidate debt, which can help you grow wealth.
• The interest you pay on your mortgage is tax deductible.

Cons

• You’ll pay closing costs — or higher rates, in the case of a loan that claims to have no closing costs.
• Depending on your closing costs, it could take years to break even on a refinance intended to reduce your interest rate.
• Cashing out equity adds to your debt.
• Extending the term of your loan can result in higher interest costs over the life of the loan.