Free Mortgage Refinance Calculator

Refinancing typically makes sense when you can lower your interest rate by at least 0.5-1%, reduce your monthly payment significantly, or shorten your loan term without drastically increasing payments. Our calculator shows you the break-even point - the number of months until your interest savings exceed the closing costs. If you plan to stay in your home longer than the break-even period, refinancing could save you thousands.

Closing costs are fees charged by lenders to process and close your refinance loan. They typically range from 1% to 5% of your home's value and include appraisal fees, title insurance, origination fees, and other charges. Our calculator lets you adjust the closing cost percentage to see how different fee structures affect your refinance savings and break-even timeline.

The break-even point is when your cumulative monthly savings equal your closing costs. For example, if refinancing costs $5,000 and saves you $200/month, you'll break even in 25 months (about 2 years). If you plan to stay in your home beyond this point, refinancing makes financial sense. Our calculator automatically calculates this for you based on your specific numbers.

Refinancing to a shorter term (like going from 30 years to 15 years) can save you massive amounts in interest, but your monthly payment will increase. Use our calculator to see both scenarios side by side. If you can afford the higher payment and plan to stay in your home long-term, a shorter term builds equity faster and saves you tens of thousands in interest. However, the lower payment of a longer term provides more monthly flexibility.

LTV ratio is your loan balance divided by your home's current value, expressed as a percentage. For example, if you owe $200,000 on a $400,000 home, your LTV is 50%. Lenders use LTV to assess risk - lower LTV usually means better interest rates and terms. Most lenders want to see LTV below 80% for the best rates. If your LTV is too high, you may need to pay for private mortgage insurance (PMI) or may not qualify for refinancing at all.

No, not always! Refinancing comes with closing costs that can range from thousands to tens of thousands of dollars. If your new rate isn't significantly lower, if you're planning to move soon, or if you're late in your mortgage term (when most payments go toward principal anyway), refinancing might cost you more than you save. Our calculator shows you both the monthly savings AND the lifetime net savings after closing costs, so you can make an informed decision.

When you refinance, your home equity (the difference between your home's value and what you owe) typically stays the same, unless you do a cash-out refinance. However, if you refinance to a shorter term, you'll build equity faster. If you refinance to a longer term or take cash out, you'll build equity more slowly. Our calculator helps you visualize how your mortgage balance decreases over time with different refinance scenarios.