How to Use the Calculator
This calculator helps you estimate the potential savings or costs of refinancing your current mortgage. Enter the following information:
- Current Loan Balance: The remaining principal on your current mortgage.
- Current Monthly P&I: Your current monthly payment (principal & interest only).
- Current Estimated Home Value: Used to determine your loan-to-value (LTV) ratio.
New Refinance Loan Details:
- New Interest Rate: The new annual rate you're considering.
- New Loan Term: Choose between typical options like 15 or 30 years.
- Cash-Out Amount: Optional—if you’re taking extra money out.
- Closing Costs: Optional—include fees associated with refinancing.
You can also estimate additional monthly costs by entering:
- Annual Property Taxes
- Homeowners Insurance
- PMI Rate (if applicable)
- HOA Dues
Click “Calculate Refinance” to get your detailed results.
Understanding the Results
You’ll see a detailed breakdown including:
- New Loan Amount: Based on your input and any cash-out amount.
- New Monthly P&I Payment: What you'll pay monthly with the new loan.
- Total Interest Paid: Over the life of the new loan.
- Total Loan Cost: P&I plus interest.
- Monthly P&I Savings: How your new monthly payment compares to your current one.
- Break-Even Point: How long it takes for your monthly savings to offset the closing costs.
In this example, refinancing an average U.S. mortgage balance of $300,000 at 7% over 30 years results in:
- New Monthly P&I: $1,995.91
- Total Interest Paid: $418,527.77
- Total P&I Paid: $718,527.77
When Does Refinancing Make Sense?
- Lower Interest Rates: If current rates are at least 0.5% lower.
- Shorter Loan Term: Switch to 15 years to save on total interest.
- Cash-Out Refinance: Access your home equity for renovations or debt consolidation.
- Remove PMI: If your home value has risen significantly.
Try the calculator now to see if refinancing is the right move for you!
FAQ:
Q: What is refinancing?
A: Refinancing replaces your current mortgage with a new one—often with better terms or a different structure.
Q: Does refinancing always save money?
A: Not always. It depends on rates, fees, and how long you plan to stay in the home.
Q: What is a break-even point?
A: It's the number of months it takes for your monthly savings to recover the refinancing costs.
Q: What is a cash-out refinance?
A: It's when you borrow more than your current balance and take the difference in cash, using your home equity.
