Refinance Calculator

New payment = balance x r / (1 - (1 + r)^-n) at the new rate and term. Monthly saving = current payment - new payment. Break-even months = closing costs / monthly saving. Total interest is compared over the full life of each loan, so a longer new term shows up as more interest even when the monthly payment is lower.

How much lower does the rate need to be?

There is no fixed number, despite the old one-percent rule. What matters is whether the monthly saving clears the closing costs before you sell or refinance again. On a large balance, half a point can break even in two years. On a small one, a full point may never pay for itself.

Why does my total interest go up when my payment goes down?

Because refinancing usually restarts the term. Trading 26 years left for a fresh 30 means four more years of interest, and the early years of any mortgage are almost all interest. To avoid it, refinance into a term close to the years you have left.

What is a no-closing-cost refinance?

The costs have not disappeared - they are either added to the balance or paid for with a slightly higher rate. It can be a reasonable choice if you might move soon, because there is nothing to recover. Over a long hold it is the more expensive option.

Does refinancing hurt my credit?

A little and briefly. The hard inquiry and the new account knock a few points off and recover within a year. Rate shopping with several lenders inside a short window counts as one inquiry, so compare offers freely.

Can I take cash out at the same time?

Yes, that is a cash-out refinance: you borrow more than you owe and keep the difference. The rate is usually slightly higher and you are turning home equity into debt. It makes sense against something durable, and rarely against a vacation.

Should I refinance to get rid of mortgage insurance?

Check first whether you can simply have it removed. On a conventional loan you can request cancellation at 20 percent equity, and it comes off automatically at 22. That is free. Refinancing to escape it only makes sense on an FHA loan, where the premium usually lasts the life of the loan.