Current Mortgage
$
$
%
New Loan Details
%
$
Refinance Analysis
Monthly Savings
—
Break-Even Point
—
Lifetime Savings
—
Current Monthly Payment—
New Monthly Payment—
Total Remaining on Current Loan—
Total Cost of New Loan—
When Does Refinancing Make Sense?
Refinancing replaces your current mortgage with a new one, ideally at a lower interest rate. The key question is whether the monthly savings outweigh the closing costs — and how long it takes to break even. If you plan to sell or move before the break-even point, refinancing will cost you money, not save it.
The Rate Reduction Rule of Thumb
A common guideline says refinancing makes sense if you can reduce your rate by at least 1%. But the real test is the break-even calculation: divide your closing costs by your monthly savings to find how many months it takes to recoup the upfront cost. If you'll stay in the home longer than the break-even period, refinancing likely pays off.
Types of Refinancing
- Rate-and-term refi: Lower rate, same loan balance — reduces monthly payment and total interest
- Cash-out refi: New loan larger than current balance — access home equity as cash, but resets loan term
- Streamline refi: Simplified process for FHA or VA loans with reduced documentation requirements
Frequently Asked Questions
How much do refinancing closing costs typically run? ▼
Refinancing typically costs 2–5% of the loan amount in closing costs: $4,000–$10,000 on a $200,000 loan. These include origination fees, appraisal, title insurance, and prepaid items. Some lenders offer "no-closing-cost" refis that fold costs into a slightly higher rate — check the math to see which option is cheaper long-term.
Should I refinance to a 15-year loan? ▼
Refinancing to a 15-year mortgage dramatically reduces total interest paid and builds equity faster, and 15-year rates are typically 0.5–0.75% lower than 30-year rates. The trade-off is a significantly higher monthly payment. Run the numbers both ways — sometimes the payment difference is better invested than used to pay down a low-rate mortgage.