How the Refinance Calculator Works
Refinancing replaces your existing mortgage with a new loan, ideally at a lower interest rate. Our calculator compares your current monthly payment to your potential new payment, factoring in closing costs to reveal your true savings.
Understanding Your Break-Even Point
The break-even point is the most important number when deciding whether to refinance. It tells you how many months it will take for your monthly savings to recover the closing costs. If you plan to stay in your home longer than the break-even period, refinancing typically makes financial sense.
When Should You Refinance?
- When interest rates have dropped at least 0.5%–1% below your current rate.
- When you plan to stay in your home past the break-even point.
- When you want to switch from an adjustable-rate to a fixed-rate mortgage.
- When your credit score has significantly improved since your original loan.
Frequently Asked Questions
Is it worth it to refinance my mortgage?
Refinancing is generally worth it if your monthly savings outweigh the closing costs within a reasonable time frame. Use the break-even point above as your guide.
Does refinancing hurt my credit score?
Refinancing involves a hard credit inquiry, which may cause a small, temporary dip in your score. This typically recovers within a few months.