Refinance Calculator
Determine if refinancing your mortgage is the right financial move. Compare your current loan with a new loan, see monthly payment savings, total interest saved, and your break-even point. Make an informed decision about whether to refinance your home loan.
How Refinancing Works
Refinancing means replacing your existing mortgage with a new loan, typically to get a lower interest rate, change your loan term, or access equity. The goal is to reduce your monthly payment, save on total interest, or both.
This calculator compares your current mortgage with a proposed refinance loan to help you decide if refinancing is worth it. Key metrics include:
- Monthly Savings: The reduction in your monthly payment.
- Total Interest Savings: The total interest you'll save over the life of the loan.
- Break-Even Point: The number of months it takes for your monthly savings to cover the closing costs.
Break-Even Formula:
Break-Even (months) = Closing Costs ÷ Monthly Savings
For example: $6,000 closing costs ÷ $200 monthly savings = 30 months to break even. If you plan to stay in your home longer than 30 months, refinancing could save you money.
When Does Refinancing Make Sense?
- Rate Reduction: A general rule of thumb: If you can reduce your rate by at least 0.5% to 1%, refinancing could save you thousands over the life of the loan.
- Break-Even Timeline: If you plan to stay in your home beyond the break-even point, refinancing is financially beneficial.
- Cash-Out: If you need funds for home improvements, debt consolidation, or other expenses.
- 2026 Context: The average refinance rate on a 30-year fixed loan was 6.27% in December 2026. Refinancing made up nearly 40% of all mortgage lending in Q4 2026.
Costs to Consider When Refinancing
- Closing Costs: Typically 2-6% of the loan principal. Includes origination fees, appraisal, title search, and recording fees.
- Discount Points: Optional upfront payments to lower your interest rate. Each point costs 1% of the loan amount and typically reduces the rate by about 0.25%.
- Prepayment Penalties: Some loans have penalties for paying off early — check your current mortgage terms.
- Private Mortgage Insurance (PMI): If your new loan has less than 20% equity, PMI may apply.
❓ Refinance Calculator FAQ
What is the break-even point in refinancing?
The break-even point is the number of months it takes for your monthly savings from refinancing to cover the closing costs. For example, if closing costs are $6,000 and you save $200 per month, your break-even point is 30 months. After that, you're in the "profit" zone.
How do I calculate if refinancing is worth it?
Calculate your monthly savings and divide your closing costs by that number to find your break-even point. If you plan to stay in your home longer than the break-even point, refinancing is likely worth it.
What are typical closing costs for refinancing?
Closing costs typically range from 2% to 6% of the loan principal. For a $250,000 loan, that's $5,000 to $15,000. Common costs include origination fees, appraisal, title search, and recording fees.
What are the current refinance rates?
As of December 2026, the average 30-year fixed refinance rate was 6.27%. 15-year rates were around 5.52% and 20-year rates around 6.19%. Rates have been in the 6-7% range throughout 2026.
How much can I save by refinancing?
Savings depend on your loan amount, rate reduction, and term. In Q4 2026, typical rate-and-term refinances reduced payments by around $248 per month. A 1% rate reduction on a $250,000 loan can save about $150-200 per month.
What is the difference between rate-and-term refinance and cash-out refinance?
Rate-and-term refinance changes your interest rate and/or loan term without increasing your balance. Cash-out refinance replaces your current mortgage with a larger loan, allowing you to take the difference in cash for home improvements, debt consolidation, or other expenses.
How does a shorter loan term affect my refinance?
A shorter loan term (e.g., 15 years instead of 30) typically has a lower interest rate but higher monthly payments. You'll pay less total interest over the life of the loan. This calculator lets you compare different terms.
What is the mortgage interest deduction for 2026?
For 2026, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. The mortgage interest deduction allows you to deduct interest on qualified debt up to $750,000.
Should I pay discount points when refinancing?
Discount points are optional upfront fees that lower your interest rate. Each point costs 1% of the loan amount and typically reduces the rate by about 0.25%. Points make sense if you plan to stay in your home long enough to recoup the cost through lower monthly payments.
What is a no-closing-cost refinance?
A no-closing-cost refinance means the lender covers the closing costs in exchange for a slightly higher interest rate. While you don't pay upfront, you'll pay more over the life of the loan. Use this calculator to compare both options.
How does my credit score affect refinance rates?
Your credit score directly impacts the interest rate you qualify for. Higher scores (740+) typically get the best rates. Lower scores may result in higher rates or require FHA/VA loans. Use this calculator with the rate you actually qualify for.
What is the difference between APR and interest rate in refinancing?
The interest rate is the cost of borrowing the principal loan amount. APR (Annual Percentage Rate) includes the interest rate plus closing costs and fees, giving you a more complete picture of the loan's total cost.
How long does the refinance process take?
Refinancing typically takes 30-45 days from application to closing, though it can vary by lender and market conditions. Factors like appraisal availability and title search can affect the timeline.
Can I refinance if I have an FHA loan?
Yes. FHA loans can be refinanced through an FHA Streamline Refinance (which requires no appraisal or income verification) or a conventional refinance. Each option has different requirements and benefits.
What is the conforming loan limit for 2026?
The 2026 conforming loan limit for one-unit properties is $806,500 in most of the U.S. Loans above this amount are considered jumbo loans and typically have higher rates.
How accurate is this refinance calculator?
This calculator provides accurate estimates based on standard mortgage formulas and the values you enter. Actual loan terms may vary by lender, and factors like credit score, employment history, and assets also affect your final approval. Use this as a planning tool, not a guarantee.
Is refinancing worth it if I plan to move in 3 years?
This depends on your break-even point. If your break-even point is longer than 3 years, refinancing may not be worth it. Enter your planned stay duration into the calculator to see if you'll save money before you move.