When should I refinance my mortgage?

Consider refinancing when current rates are at least 0.5% to 1% lower than your existing rate, when you want to shorten your loan term, eliminate PMI, or need cash for home improvements through a cash-out refinance.

How much does it cost to refinance?

Refinancing typically costs 2% to 5% of the loan amount in closing costs. For a $300,000 loan, that is $6,000 to $15,000. Some lenders offer no-closing-cost refinances, but the costs are usually rolled into a higher interest rate.

What is the break-even point on a refinance?

The break-even point is the number of months it takes for your monthly savings to exceed the closing costs. Calculate it by dividing total closing costs by monthly savings.

Can I refinance with bad credit?

Yes, though options may be limited. FHA Streamline refinances have relaxed credit requirements. VA IRRRLs are available to veterans. Conventional refinances typically require a minimum 620 credit score.

What is the difference between rate-and-term and cash-out refinance?

A rate-and-term refinance changes your interest rate or loan term without taking equity out. A cash-out refinance lets you borrow more than your current balance and receive the difference in cash.

Refinance Calculator: See How Much You Could Save

Compare your current mortgage to a new refinanced loan. Estimate your monthly savings, break-even point, and total interest savings over the life of the loan. Free, no sign-up required.

Home Refinance Calculator

ZIP: —

Current Loan

Current loan balance Current interest rate (APR %) Remaining term (years) Current monthly P&I (optional)Enter P&I only if you know it.

New Refinance Loan

New loan term New interest rate (APR %)Editable Closing costsUsed for break-even estimate. Roll closing costs into loan? Cash out (optional)Adds to the new loan balance.

Property & Advanced Options

Home value ZIP CodeOptional Credit score Property tax (monthly) Homeowner's insurance (monthly) HOA fees (monthly)Optional PMI (monthly)

Auto uses LTV + credit score (estimate)

New estimated monthly payment

$0.00

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Monthly payment change

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vs. current P&I + same costs.

Break-even (closing costs)

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Months to recover via savings.

New loan amount

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Balance + cash out (+ rolled costs).

Amortization Schedule (New Loan P&I)—

Month	Payment	Principal	Interest	Balance

Estimates only. Rates, taxes, insurance, and PMI vary by lender, program, and location.

What Does Refinancing Your Mortgage Mean?

Refinancing replaces your existing mortgage with a new loan — often at a lower interest rate, shorter term, or both. A refinance calculator helps you compare your current loan to a potential new one, showing you the monthly savings, total interest saved, and how long it will take to break even on closing costs.

Key Factors in a Refinance Decision

Interest Rate Difference

Even a 0.5% rate reduction can save tens of thousands over the life of your loan. Compare your current rate to today's market rates.

Closing Costs

Refinancing typically costs 2%–5% of the loan amount. Your break-even point is when monthly savings exceed total closing costs. Learn more about closing costs.

Loan Term

Switching from a 30-year to a 15-year term increases monthly payments but dramatically reduces total interest paid. Compare 15-year vs 30-year options.

Break-Even Point

The number of months until your accumulated savings exceed closing costs. If you plan to move before the break-even point, refinancing may not make sense.

Cash-Out Option

A cash-out refinance lets you borrow more than you owe and pocket the difference. Useful for home improvements or debt consolidation. See our cash-out guide.

How to Use Our Refinance Calculator

Enter Your Current & New Loan Details

Current Loan Balance: The remaining principal on your existing mortgage.
Current Interest Rate: Your existing annual percentage rate (APR).
Current Monthly Payment: What you pay each month for principal and interest.
New Interest Rate: The rate you expect on the refinanced loan. Check our refinance rates page for today's rates.
New Loan Term: Choose 15-year fixed, 30-year fixed, or 5/1 ARM.
Closing Costs: Estimated closing costs for the new loan (typically 2%–5% of loan amount).

When Does Refinancing Make Sense?

Common Refinancing Scenarios

1

Rates have dropped significantly. If current rates are at least 0.5%–1% lower than your existing rate, refinancing could save you substantially over the life of the loan.

2

You want to shorten your loan term. Moving from a 30-year to a 15-year mortgage builds equity faster and reduces total interest, even if your monthly payment increases.

3

You want to eliminate PMI. If your home has appreciated and you now have 20%+ equity, refinancing can remove private mortgage insurance from your payment.

4

You need cash for home improvements. A cash-out refinance lets you tap your home equity while potentially getting a better rate.

5

You want to switch from an ARM to a fixed rate. If you have an adjustable-rate mortgage and want payment certainty, refinancing to a fixed rate provides stability.

The Break-Even Formula

Your break-even point tells you when your cumulative monthly savings exceed the closing costs of the refinance:

Break-Even (months) = Closing Costs / Monthly Savings

For example, $4,000 in closing costs with $200/month savings = 20-month break-even point.

Tips Before You Refinance

Before committing to a refinance, make sure to shop around — compare offers from at least 3 lenders. Pay attention to the APR (not just the rate), which includes fees and gives a more accurate cost comparison. Also consider how long you plan to stay in the home. If you'll move before the break-even point, the upfront costs may outweigh the savings.

For a complete guide on the refinancing process, visit our How to Refinance page. If you're considering tapping into equity, check our HELOCs guide as an alternative to cash-out refinancing.