FOA Tools

Refinance Calculator

Use our refinance calculator to determine whether the costs of refinancing into a new home loan makes sense for your financial situation.

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  • MONTHLY SAVINGS: {{user.details.refiSavings|currency:undefined:0}}/mo
  • NEW PAYMENT: {{user.details.newPayment|currency:undefined:0}}
  • BREAK EVEN: {{user.details.breakEven}} months
  • COSTS: {{user.details.refiFees|currency:undefined:0}}
  • LIFETIME SAVINGS: {{user.details.lifeTimeSavings|currency:undefined:0}}

 

How our mortgage refinance calculator works

To use our refinance calculator, you’ll need to enter details about your current mortgage and the potential new loan. Once you put in the information, the refinance calculator will show you what you stand to save each month and your potential lifetime interest savings.  

Our mortgage refinance calculator also factors in refinance fees. You’ll even see your break-even period, which is how long you’ll need to remain in your home to recoup the refi costs.

Using our refinance costs calculator

As you use the mortgage refinance calculator, keep in mind that the accuracy of the information you put in will affect your answers. To get the best results, make sure the loan details you enter are correct.  

Here’s the information you’ll need: 

Current loan amount: Enter your current mortgage balance.  

Interest rate: Enter the exact interest rate on your current mortgage, without rounding up or down.  

Current loan term: Enter the number of years you financed the home (e.g., 10, 15, 20, or 30 years). 

Origination year: Enter the year you took out the mortgage. 

New loan amount: Enter the amount you plan to refinance. 

New interest rate: This field is pre-filled with the average refinance mortgage rates today; however, your actual interest rate may differ. Contact a Finance of America Mortgage Advisor to provide you with a personalized rate quote.

New loan term: Enter the term length of the new loan.  

Refinance fees: Enter the approximate total amount of closing costs for your refinance. Typical refinance closing costs include lender fees, third-party fees, and additional costs. While you won’t know the exact cost of your refinance until you move forward with a refinance, a Finance of America Mortgage Advisor can give you an idea of your closing costs. Alternatively, you can use a percentage of your loan amount. Refinance closing costs often range from 3% to 6% of the mortgage amount. If you plan to do a no-closing-cost refinance, use the “Advanced” drop-down and select the option, “roll fees into new loan.”

Advanced refinance calculator  

Cash-out: For a refinance cash-out calculator, use the “Advanced” drop-down and enter the amount of home equity you wish to borrow against.  

Roll fees into new loan: Select this option for a no closing cost refinance calculator.

How to calculate mortgage payments

Once you input your information, the refinance calculator will show the results of refinancing your home. Here’s a breakdown of how to calculate mortgage payments: 

Monthly savings: This is the difference between your current mortgage payment and the estimated new payment. 

New payment: This is the estimated payment of your new mortgage. Keep in mind, the refinance calculator will calculate payments with interest but not with taxes or homeowners insurance. To estimate your full PITI payment (principal, interest, taxes, and insurance), add what you currently pay for property taxes and homeowners insurance monthly. 

Break-even period: This figure tells you how many months it will take to recoup your refi costs. Your final closing costs will determine your actual break-even period and may differ from the refinance calculator break-even estimate. 

Costs: This is the estimated cost of the refinance loan based on your input. Your actual closing costs will depend on your lender’s refinance fees, third-party fees, escrow deposit amounts, and any other fees you may pay at closing, such as discount points

Lifetime savings: This is how much you stand to save over the remaining term of the mortgage.

Reasons to consider a refinance 

There are multiple reasons a borrower may consider a home refinance — and many potential benefits as well. The most common reasons homeowners refinance a home loan are: 

  • To lower the interest rate 
  • To reduce your monthly payment by extending the loan term 
  • To pay off the home faster by decreasing the loan term 
  • To access home equity for repairs or to fund a large purchase 
  • To eliminate private mortgage insurance (PMI) 
  • To go from an adjustable-rate loan to a fixed-rate loan 
  • To change the loan type (e.g., to go from an FHA loan to a conventional loan) 
  • To change or improve other loan terms  

While refinancing can reduce the cost of your mortgage, not all refinances result in savings. For example, if a borrower refinances a loan on which they have 20 years remaining on their term and replaces it with a 30-year mortgage, they extend their loan and start over from scratch and pay steeper lifetime interest costs. This will likely result in a higher total cost, even with a lower monthly payment. 

Additionally, you’ll have to pay a new set of closing costs when refinancing a mortgage. In some cases, refi costs may outweigh the potential savings.

When should I refinance my mortgage?

In evaluating when to refinance a mortgage, look beyond the monthly payment, as many factors determine if refinancing makes financial sense. 

Weigh these factors when considering when to refinance a mortgage:  

  • Total amount borrowed. In the case of a cash-out refinance, you’ll be increasing what you owe on your home. 
  • Interest rate. If refinance mortgage rates today are significantly lower than your current loan, you’ll reduce your monthly payment and reduce your total interest paid, as long as you don’t extend the loan term. To qualify you for the best mortgage refinance rates, your lender will look at your credit score and other financial information. 
  • Loan term.  Extending the loan term will reduce your monthly payments but will likely increase what you’ll pay in interest over the life of your loan. On the other hand, shortening the loan term will increase your monthly payment but reduce the interest paid. 
  • Refinance fees. You’ll need to pay fees when refinancing your mortgage. A no-closing-cost refinance can reduce what you pay upfront, but it’s not free. In exchange for not having to pay closing costs in a lump sum, you’ll likely pay a higher interest rate over the loan term or roll the closing costs into your monthly mortgage payment.
  • Break-even point. Compare the amount of time it will take to recoup the refinance costs to how long you plan to stay in the home. 

How much does it cost to refinance a mortgage?

Refinance closing costs often range from 3% to 6% of the loan amount. When you refinance, you’ll encounter many of the same fees you paid when you initially bought your home. You’ll have to pay your lender’s fee for originating the new loan, a home appraisal (if you don’t get an appraisal waiver), and other third-party fees. The exact cost you’ll pay will depend on the loan type, the loan amount, and what your lender and third-party service providers charge.  

Here’s a look at some general refinance costs you might need to pay. 

Refinance Closing Costs 
Fee   Average cost  
Application fee  $75 to $300 
Loan origination fee  0% to 1.5% of loan amount 
Appraisal fee  $300 to $700 
Attorney/settlement fee  $500 to $1,000 
Title search/title insurance  $700 to $900 
Survey fee  $150 to $400 

Source: Federal Reserve 

In addition to these common expenses, you may have other fees, depending on the terms of the existing and new loans, your lender’s requirements, and other factors. 

Additional refinance costs

  • Mortgage points 
  • Refinance fee 
  • Homeowners insurance/escrow fee 
  • Property taxes/escrow fee 
  • Local recording fee 
  • Prepayment penalty 

You may not have to cover all the expenses mentioned. For example, you may not need a survey of your property. You may also be able to negotiate some of your fees. For instance, if you’re using the same title company as you did when you bought the home, you could ask them to lower their fee for the new loan.  

Since fees vary among lenders and third-party services, it’s essential to shop around. You might want to consider a no-closing-cost refinance with your lender to reduce your out-of-pocket expenses. A no-closing-cost refinance doesn’t mean you won’t pay any closing fees, though. In reality, the lender typically charges a higher interest rate in exchange for covering your closing costs, or allows you to roll the closing costs into the loan. Our refinance calculator provides an option to include the closing costs in the loan amount.

How to calculate the break-even point

One significant factor that can help determine when to refinance a mortgage is the break-even point. The breakeven period refers to how long you have to remain in the home after the refinance to make back what you spent in refinancing fees and closing costs.  

While you may see a drop in your monthly payments immediately after refinancing a mortgage, it will take some time for the savings to offset what you spent to refinance. The refinance calculator break-even point is an objective way to determine if the refinance makes financial sense. 

The shorter the break-even point, the quicker you’ll make your money back. Conversely, the longer the break-even point, the longer it will take to recoup the expense of the refinance. If you need to move or sell your home before the break-even point, you would have lost money.

Refinance calculator break-even example 

While our refinance calculator shows your break-even point, to calculate it yourself, take the total amount you’ll spend in closing costs and any expenses related to the refinance and divide it by the monthly savings the refinance will produce. The answer is the number of months it will take to make your money back. 

Let’s use a simple example of refinancing a $300,000 mortgage with refinance closing costs totaling $6,000 and a monthly savings of $274. 

Refinance Calculator Break-Even Point 
Refinance fees  $6,000 
Monthly savings  $274  
Break-even point   22 months ($6,000 ÷ $274) 

In the above example, the homeowner will recoup their refi costs after 22 months. If they plan to stay in their home much longer than that, the refinance calculator shows refinancing their home makes financial sense. If they sell the home earlier, the refinance calculator break-even period indicates that they may want to reconsider refinancing or they could lose money in the process.

Refinance calculator FAQs

Is mortgage refinancing right for me? 

Depending on your needs, refinancing may be a good move. A mortgage refinance can lower your monthly payment, reduce the total cost of your home loan, remove PMI, or provide access to your home equity. As you think about when to refinance a mortgage, look beyond the monthly payment, and consider the total cost of the loan, refinance fees, and your break-even point. Use our mortgage refinance calculator to help you crunch the numbers. 

How do mortgage refinance rates compare to the rates on purchase home loans? 

Refinance interest rates are typically higher than purchase interest rates. Additionally, some lenders may charge a refinance fee. Because interest rates fluctuate, be sure to consult your lender or a FAM Mortgage Advisor for refinance mortgage rates today. 

Can you get denied for a refinance? 

Yes, it’s possible to be denied a mortgage refinance. The process of applying for a refinance is similar to getting an initial mortgage. In most cases, lenders will evaluate your credit history and other financial information, as well as the value of your home. If you fail to meet your bank’s approval requirements or your home doesn’t appraise high enough, your lender may turn down your application. When determining when to refinance a mortgage, consider your credit history and your likelihood of approval. 

Does refinancing hurt your credit?  

The process of applying and shopping around for your loan could initially ding your credit score since lenders will likely place a hard inquiry on your credit. One way to limit the impact is to limit your comparison-shopping within a 14-day to 45-day period, according to Experian, one of the three main credit reporting agencies. 

What if I don’t qualify for a refinance because of a financial hardship? 

If you’re experiencing financial hardship, such as a job loss, reduced income, or illness, you may be able to lower or temporarily suspend your mortgage payment without refinancing. Many lenders offer mortgage forbearance or a loan modification to qualifying borrowers. Before agreeing to these options, though, make sure you understand the new terms.  

While a loan forbearance puts your loan payments on hold temporarily, a loan modification changes the terms of your existing loan to reduce your interest rate or monthly mortgage payment — or both. However, these options are usually temporary, and you’ll eventually need to repay the missed payments after the modification or forbearance period expires.  

Do I have to refinance my loan with the same lender? 

No, you can refinance your mortgage with a different bank or mortgage company than your current lender. To find the best mortgage refinance rates, shop around and compare multiple lenders.  

Can I refinance my home more than once? 

Yes, you can refinance your home more than once. However, keep in mind that each time you refinance, you’ll need to pay closing costs. Refinancing multiple times may offset your savings. Review the results of the refinance calculator to see if refinancing multiple times makes sense.  

What is a streamlined refinance? 

A streamlined refinance is one in which the lender requires less paperwork and can process the loan quickly. The lender may not verify your income or order a home appraisal. Only some loan programs, such as VA, FHA, and USDA, offer a streamlined refinance. Run the refinance calculator to compare the terms of each refinance you are considering. 

What is a no-closing-cost refinance?  

A no-closing-cost refinance is one in which you won’t have to pay closing costs out-of-pocket. However, the lender will either offset the refinance fees with a higher interest rate, or roll them into the loan. Our refinance calculator can show you the impact of financing your closing costs.

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