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Use this mortgage refinance calculator to see if a refinance makes good financial sense for your mortgage.
How to Use the Refinance Calculator
Depending on your financial situation, a refinance could be the key to significant savings or a significant expense.
It isn’t always obvious if a mortgage refinance is a smart financial move—that’s why this refinance mortgage calculator can help you consider all the factors that contribute to the cost or savings of refinancing.
The mortgage refinance calculator considers several factors, such as:
- Monthly payments
- Interest rate
- Loan term
- Loan amount
- Type of refinance (cash-out or rate-and-term)
- Refinance fees and expenses
Once you verify this information, the refinance mortgage calculator can help you determine the short-term cost and long-term savings of a refinance.
Should I Refinance?
Refinancing can help you secure a better rate, provide access to additional cash, consolidate debt, switch from an ARM (Adjustable-Rate Mortgage) to a fixed-rate loan, etc.
The decision to refinance should be based on your goals and the available options.
This cash-out refinance calculator can help you determine if a refinance is a good financial decision for your unique situation.
Mortgage refinance: A mortgage refinance is a new loan that pays off (or “satisfies”) your existing mortgage.
This can allow you to secure a better rate, better term, or help accomplish your long-term or short-term financial goals.
Cash-out Refi: A cash-out refi satisfies your existing mortgage while also paying off other accounts like credit cards, auto payments, or personal loans.
This loan is secured by the portion of your home’s equity that you’ve already paid off, “cashing out” on your equity.
Interest rate: Unfortunately, loans are not free—an interest rate is a percentage of your balance that your lender charges you each period as a cost of borrowing money.
Interest rates can either be fixed (staying the same through the loan term) or adjustable (changing periodically based on an index).
Refinance fees: If you can get a loan at a lower rate, shouldn’t you always refinance? Not necessarily—a lower rate comes at the cost of fees such as application fees, appraisal fees, credit report or VOE fees, and loan origination or underwriting fees.
You have to weigh these costs against the savings of a lower interest rate to determine if a mortgage refinance is a wise financial decision.
Home equity: When you take out a mortgage, your house is collateral for the loan. This means that while you are the legal owner of your home, the lender has a financial interest in it.
As you pay down your mortgage, you pay off the lender’s financial interest. This portion that you’ve paid off is your equity in the home.
Origination year: The loan origination process begins at application (or pre-application) and concludes at the consummation or closing of the loan.
The origination date (including the origination year) is the date that you sign the promissory note.
Loan term: Not to be confused with loan terms (which include variables like interest rate and fees), loan term refers to the length of the loan.
For example, a 30-year mortgage has a loan term of 30 years.
Closing costs: Expenses like appraisal fees, flood certification, private mortgage insurance (PMI), and title insurance are closing costs. In a purchase, the buyer and seller negotiate how closing costs are paid, but in a refinance, the borrower is responsible for the closing costs.
Mortgage points: When you take out a mortgage, you are taking on the responsibility of repaying not only the loan itself but also the interest it accrues.
Mortgage points (or discount points) is an amount you pay upfront in return for a lower interest rate.
Property value: You can calculate property value either through an appraisal or automated valuation method (AVM) or through the actual sale price of the property.
Amortization schedule: Your house is a large expense: an amortization schedule shows how you will pay off the expense over time.
This is essential because interest each period is calculated on the current balance of the loan.
How soon after buying a house can I refinance?
For a convention rate-and-term refi, there is no uniform waiting period (although your financial institution may have its own guidelines), but you may have to wait a minimum of 6 months to obtain a cash-out refi.
What is the break-even point on a mortgage refinance?
Refinancing includes money up front (in closing costs, discount points, etc.) but may save you long-term (through a lower interest rate.)
The break-even point is the point at which the extra money you spend equals the money you save.
Use a cash-out refinance calculator to determine your break-even point.
How does my credit score affect my ability to refinance?
Each institution has underwriting guidelines, including a minimum credit score.
Since a refinance is a new loan that replaces your original loan, your financial institution will require that you have a qualifying credit score.
What is the difference between refinancing and remortgaging?
Technically, the words “refinance” and “remortgage” mean the same thing in different parts of the world.
Some people use the word “refinance” to describe a replacement mortgage from a different financial institution and “remortgage” to describe a replacement mortgage from the same organization, but a financial professional will use the words interchangeably.