Calculate your refinance savings, break-even point, and compare loan scenarios to make informed refinancing decisions.
Reduction in monthly payment
Time to recover closing costs
Over life of loan
Based on your inputs, refinancing could save you money. Consider the break-even point and your long-term plans.
Refinancing replaces your current mortgage with a new one. It's a strategic financial move that should be considered carefully. Here are the top reasons homeowners choose to refinance:
This is the most common reason. Reducing your rate by even 0.75% to 1% can save significantly on monthly payments and total interest over the life of the loan.
Switching from a 30-year to a 15-year mortgage often increases monthly payments slightly but cuts total interest costs drastically and builds equity faster.
Moving from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage provides stability, protecting you from future rate hikes.
The most critical calculation in refinancing is the "Break-Even Point." This is the time it takes for your monthly savings to outweigh the closing costs of the new loan.
Calculation: Total Closing Costs ÷ Monthly Savings = Months to Break Even
If you plan tomove before hitting this point, refinancing will likely cost you money rather than save it.