Mortgage Refinance Calculator

When Does Refinancing Make Sense?

• Rate Drop: Generally 0.75-1% or more lower than current rate
• Break-Even: Can recoup costs before selling or moving
• Term Reduction: Shortening loan term even at similar rate
• Cash-Out: Need to access home equity (different calculation)

Refinancing Costs

• Application Fee: $250-500
• Appraisal: $300-700
• Title Insurance: 0.5-1% of loan
• Origination Fee: 0.5-1% of loan
• Points: Optional 1% per point to buy down rate

The Break-Even Point

Break-Even = Closing Costs / Monthly Savings

If break-even is 24 months and you plan to stay 10+ years, refinancing likely makes sense. If you might move in 2-3 years, it may not.

Rate vs. Term Decision

• Lower rate, same term: Lower payment, less total interest
• Same rate, shorter term: Higher payment, much less interest
• Lower rate, longer term: Lower payment but may pay more interest overall

When NOT to Refinance

• Planning to move soon (before break-even)
• Rate reduction is minimal (less than 0.5%)
• Extending loan term significantly
• High closing costs relative to savings
• Credit score has dropped significantly