Mortgage Refinance Calculator

Mortgage refinancing is basically your chance at a “redo” on your mortgage. It’s the process of replacing your current mortgage with a new loan with better terms—most often to lower your interest rate, shorten your loan term or tap into home equity for some extra cash.

There are a few factors that usually come into play when deciding if you should refinance: current market conditions, your financial stats and your financial goals. When interest rates are low or your financial circumstances have improved, refinancing may help you save money.

Refinancing looks a lot like applying for a mortgage. In most cases, you'll go through the familiar steps of a credit check, property appraisal and closing costs. If you get approved, your new loan will be used to pay off your original mortgage.

In certain circumstances, you may not save money as a result of refinancing your loan. For example, your interest rate and payment could be increasing under the refinance, or your payment may be lower but you will pay more over the life of the loan because you’ve chosen to stretch your loan over a longer term than the current remaining term on your loan. In such circumstances, if a refinance will not save but rather will cost you more, you are not likely to recoup the closing costs you may pay to refinance your loan.

This mortgage loan refinance calculator reveals if the benefits of refinancing outweigh the costs. It compares your current mortgage terms to a potential new loan, showing how much you could save over time and how long it would take to recover the cost of refinancing with your new monthly savings, sometimes called the break-even point.

Here’s how to use our refinance calculator.

First, look at your current mortgage statement and plug in your monthly payment, current balance, remaining loan term and interest rate.

Then, enter the information on the loan you’re considering switching to. There’s also a place for the refinancing costs, which should include an estimate of the total closing costs, origination fees, the appraisal, title services, attorney costs and more. This usually amounts to around 2% to 6% of the loan amount.

From there, let the calculator do its thing to see how the two loans stack up. If you’re toying with multiple loan options, now’s your chance to plug and play. Run them all through the calculator and see which loan looks better on paper. As you calculate refinance mortgage payments, pay close attention to the break-even point—when the savings from your new loan will cover the cost of refinancing—to ensure it’s worth your while.

The break-even point is when you start to see financial benefits: when your monthly savings cover the upfront closing costs of the new loan. If your refinance goal is to save money, you need to stay in your home long enough to recover those costs and benefit from lower payments.

Here’s an example of the break-even point in action:

Say refinancing costs $6,000 and you save $200 per month with the new mortgage. Divide the total refinancing costs ($6,000) by the monthly savings ($200) and you’ll end up with 30. That means 30 months until you break even. If you stay in the home longer than that, the $200 monthly savings will go straight into your pocket.

If you’re doing a cash-out refinance to tap into home equity, the break-even point still matters—but the math shifts a bit.  Since you're borrowing more money, your monthly payment might go up. The key is how you use the cash. If it helps pay off high-interest debt, fund a renovation, or boost your financial health, the long-term benefits can outweigh the higher cost.

 In a cash-out refinance, breaking even means putting the money you take out to good use. You need to consider when the value you get from the cash-out starts to outpace the added cost of the new loan, including closing costs and higher monthly payments. It’s about return on equity in this case; a cash-out refinance pays off when the financial benefits exceed the cost of borrowing.

Deciding when to refinance is all about timing. Maybe you’ve been waiting for a low rate and now is the time to strike. Or maybe you need lower payments to free up some cash for another investment. There are a lot of scenarios where refinancing can make sense.

Here’s a look at some of the most popular reasons to refinance. If you fall into one or more of these categories, it might be time to pull the trigger (after you run it through the calculator, of course).

1. You want a lower interest rate: When rates drop, you might be able to swap your loan for one that costs less. A lower rate could reduce your monthly payments and the total amount of interest you’ll pay over the life of your loan.
2. Your credit score went up: Lenders often offer better terms to borrowers with strong credit histories, so this could be a good chance to refinance.
3. Your finances have changed: Sometimes your mortgage needs to adapt to new circumstances. Got a raise? Consider a shorter term loan to pay off your mortgage faster. Hit a financial rough patch? It could be a good time to reduce your monthly payments by extending your loan term.
4. You want to switch loan types: If you have an adjustable-rate mortgage (ARM) and you're headed toward the end of the fixed-rate period, you might want to refinance to a fixed-rate mortgage so you can avoid potential rate increases.
5. You want to drop mortgage insurance: If you put down less than 20%, you’ve probably been stuck with mortgage insurance of some kind, whether it’s PMI or an FHA loan insurance premium. Now that you’ve built up equity, you may be able to drop mortgage insurance through a refinance.
6. You want to tap into your home equity: If you need funds for a major expense such as home improvements or college costs, a cash-out refinance allows you to borrow against the equity you've built up in your home.
7. You need to consolidate high interest rate debt: Refinancing can help streamline your finances by folding multiple high interest rate debts into one loan with a lower interest rate.

A refinance has a lot of the same fees as a mortgage. On average, refinancing will cost you 2% to 6% of the total loan amount.

If you think back to the break-even point, it’s important to make sure the money you could save outweighs the cost of refinancing. The costs we use in our refinance calculator are just an estimate, so keep that in mind.

How to estimate refinancing costs?

Suppose you want to refinance a mortgage of $200,000. You estimate that the refinancing costs will be about 3% of the loan amount. Therefore, your calculation would be $200,000 x 0.03 = $6,000. This estimated $6,000 would cover the fees associated with refinancing, such as application fees, appraisal fees, title searches and more.

Here’s a breakdown of the refinancing fees you’ll be on the hook for:

• Application and credit check: $75 to $300 to process your loan application and check your credit.
• Loan origination: 0.5% to 1.5% of the loan amount for your lender to evaluate and prepare your new mortgage.
• Appraisal: $300 to $900 for a professional to assess your home’s current value.
• Title search and title insurance: $400 to $900 covers the title search and title insurance, which protect against errors in the ownership records of your home.
• Inspection: Add in an extra $175 to $300 if your lender requires a home inspection.
• Attorney costs: If your state requires an attorney to oversee the closing, you’ll be charged their rate.
• Mortgage prepayment penalty: Yes, it's possible you could get dinged for paying off your initial loan too soon. Check your current mortgage agreement to see if this applies and how much it could cost. Citi doesn’t charge prepayment penalties.
• Recording fees: $25 to $250 for your local or state government to officially record the loan transaction.
• Survey: $250 to $600 to verify the property lines of your home.
• Flood certification fee: $5 to $15 for flood certification to determine whether your home sits in a flood zone.

Refinancing comes in several flavors, depending on your loan type and financial goals. Here are some options.