Refinancing Calculator
Compare your current mortgage with a new offer to see if refinancing saves you money.
Refinancing Calculator
Compare your current mortgage with a new offer to see if refinancing is right for you.
Current Mortgage
New Offer
Include bank fees, appraisal, and typical closing costs.
Monthly Savings
Lifetime Savings
Break-even Point
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Mortgage Refinancing: When to Refinance Your Home?
Refinancing your mortgage can be a powerful financial move to lower your monthly payments, shorten your loan term, or access cash from your home's equity. Determining if the numbers work in your favor requires a clear-eyed look at the current interest rates versus your original loan terms.
Use our Refinancing Calculator to see your potential monthly savings, total lifetime savings, and most importantly, how many months it will take to break even on the closing costs.
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How it works
Refinancing typically involves paying off your original mortgage and starting a new one. The process mirrors the original home purchase, requiring an application, credit check, appraisal, and closing costs.
- Interest Rate Savings: The most common goal is to secure a lower rate to reduce the monthly principal and interest (P&I) payment.
- Closing Costs: You will typically pay between 2% and 5% of the loan amount in closing costs, which affects your break-even period.
- Term Changes: Moving from a 30-year to a 15-year mortgage can save significant amounts in interest over the life of the loan, even if the monthly payment increases.
Practical Examples
Monthly Budget Optimization
Typically achieved when market rates drop significantly below your locked rate.
Term Reduction Strategy
Prioritizing debt freedom and long-term interest savings.
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Expert Financial Tips
- Calculate your break-even point before committing to any new loan.
- Check for prepayment penalties on your current mortgage agreement.
- Consider 'rolling' closing costs into the new loan if upfront cash is limited.
- Shop at least three lenders to compare different APRs and fee structures.
Frequently Asked Questions
Is there a limit on how many times I can refinance?
Theoretically no, but you should always ensure the new loan's savings exceed the closing costs of the previous one to maintain financial growth.
Can I refinance if I have low equity in my home?
It is often more challenging but possible. Most lenders require at least 5-10% equity, though specific government-backed programs may allow for lower thresholds.
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See your potential savings
Explore our other financial tools to get a complete picture of your journey.