Loan Refinancing Calculator

Compare your current loan against a refinanced offer. See monthly savings, total interest savings, and the break-even period to decide if refinancing makes sense.

Current Loan

Current Loan Balance

Current Interest Rate (%)

Remaining Term (Years)

New Loan

New Interest Rate (%)

New Loan Term (Years)

Closing Costs ($)

Results

Enter values and click Calculate to see results

How to Use This Loan Refinancing Calculator

Enter your current loan details

Input your remaining balance, current interest rate, and how many years are left on your loan. Find these numbers on your most recent statement.

Input the new loan offer

Enter the refinanced interest rate, new loan term, and any closing costs. Lenders must provide these figures in a Loan Estimate document.

Review the comparison

The calculator shows your monthly savings, total interest savings, and the break-even period when savings exceed closing costs.

Refinancing Break-Even Examples

Balance	Current Rate	New Rate	Closing Costs	Break-Even	Total Savings
$200,000	6.5%	5.5%	$4,000	20 months	$18,500
$150,000	7%	6%	$3,500	22 months	$12,200
$300,000	6%	5%	$6,000	26 months	$35,800
$100,000	5.5%	5%	$2,500	34 months	$4,100

Note: Examples assume refinancing into a new 30-year term. Shorter terms increase monthly savings but may not always maximize total savings.

Understanding Loan Refinancing

Refinancing replaces your current loan with a new one, ideally at a lower interest rate. The new loan pays off the old balance, and you start fresh with new terms. Homeowners refinance mortgages to reduce monthly payments, shorten the loan term, or tap into home equity. The key is whether the savings outweigh the closing costs.

Closing costs typically run 2-5% of the loan amount. On a $200,000 refinance, expect $4,000-10,000 in fees covering appraisal, title search, origination, and other charges. Some lenders offer "no-closing-cost" refinances but roll the fees into a slightly higher rate or add them to the loan balance.

The break-even period tells you how long it takes for monthly savings to cover closing costs. If closing costs are $4,000 and you save $200 per month, break-even is 20 months. Plan to stay in your home beyond this point for refinancing to make financial sense.

When Refinancing Makes Sense

Rate Drop of 0.75% or More

A rule of thumb says refinancing is worth it if you can lower your rate by at least 0.75-1%. Smaller drops may still work for large loan balances or if you plan to stay in the home long-term.

You'll Stay Past Break-Even

If break-even is 24 months but you plan to move in 18 months, refinancing loses money. Only refinance if you expect to keep the loan beyond the break-even point.

Your Credit Score Improved

Better credit since your original loan may qualify you for lower rates. Check your score before applying. Scores above 740 typically get the best mortgage rates.

Switching from ARM to Fixed

If you have an adjustable-rate mortgage and rates are rising, refinancing to a fixed-rate loan provides payment stability. This is more about risk management than pure savings.

Frequently Asked Questions

How much can I save by refinancing?

Savings depend on your loan balance, rate reduction, and remaining term. A 1% rate drop on a $200,000 mortgage saves about $130-150 monthly. Over 30 years, that's roughly $47,000 in interest savings, minus closing costs. Use this calculator with your specific numbers for an accurate estimate.

Does refinancing hurt my credit score?

Expect a small, temporary dip of 5-10 points from the hard inquiry. Multiple mortgage inquiries within a 45-day window count as one inquiry for scoring purposes. Your score typically recovers within a few months if you continue making on-time payments.

Should I refinance to a shorter term?

Shorter terms like 15 years come with lower rates and much less total interest, but higher monthly payments. Refinancing from a 30-year to 15-year loan might save $50,000+ in interest but could add $400-600 to your monthly payment. Make sure the higher payment fits your budget.

What documents do I need to refinance?

Lenders typically require proof of income (pay stubs, W-2s, tax returns), bank statements, proof of homeowners insurance, and authorization to pull your credit report. Self-employed borrowers may need additional documentation like profit-and-loss statements.

Can I refinance if I have bad credit?

It's harder but possible. FHA streamline refinances don't require credit checks for existing FHA loans. VA loans offer similar IRRRL programs. Conventional refinances typically need a 620+ score. If your score is below 620, focus on improving credit before refinancing unless you have an urgent reason like avoiding foreclosure.

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