Mortgage Refinance Calculators

Is Refinancing Worth It?

The simplest way to decide is the break-even calculation: divide your total closing costs by the monthly savings from the new rate. If refinancing from 7.0% to 6.0% on a $300,000 balance saves you $200 per month but costs $8,000 in closing fees, you break even in 40 months. If you plan to stay in the home for 5 or more years, that is $4,000 in net savings after recouping every dollar of closing costs. The longer you stay past the break-even point, the more you save.

There are two main types of refinance. A rate-and-term refinance simply replaces your existing loan with one that has a lower rate, a shorter term, or both. A cash-out refinance lets you borrow more than you owe and pocket the difference for renovations, debt payoff, or other large expenses. Cash-out refinances typically come with slightly higher rates because the lender takes on more risk with a larger loan balance. If you want to access equity without replacing your entire mortgage, explore our home equity and HELOC calculators to compare that alternative.

Shortening your term is another powerful refinance strategy. Switching from a 30-year to a 15-year mortgage increases your monthly payment, but the lower rate and faster payoff can save tens of thousands in total interest. On that same $300,000 balance, going from 30 years at 7.0% to 15 years at 6.0% raises the payment from $1,996 to $2,532 but cuts total interest from $418,527 to $155,683. Use our mortgage payment calculators to compare monthly costs across different term lengths and rates before deciding.