Mortgage Refinance & Break-Even Calculator
Calculate monthly payment savings, total interest saved over the loan life, closing costs, and break-even timeline in months when refinancing your home mortgage.
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Frequently Asked Questions
When does refinancing a mortgage make financial sense?
Refinancing typically makes strong financial sense if you can lower your interest rate by 0.75% to 1.0% or more, reduce private mortgage insurance (PMI) because home equity increased, or switch from an adjustable-rate mortgage (ARM) to a predictable fixed-rate loan while planning to stay in the home past the break-even point.
How do you calculate the mortgage refinance break-even point?
The break-even point in months equals Total Closing Costs divided by Monthly Payment Savings. For example, if closing costs are $5,000 and your monthly payment drops by $250, your break-even point is 20 months ($5,000 / $250). If you stay in the home longer than 20 months, you come out ahead financially.
What are typical refinance closing costs in the United States?
Closing costs typically range between 2% and 5% of the total loan amount. On a $350,000 mortgage, closing costs generally fall between $5,000 and $10,000, covering appraisal fees, loan origination, title search, title insurance, recording fees, and attorney charges.
Should I refinance into a 15-year or a 30-year mortgage?
A 30-year refinance keeps monthly payments low and provides cash-flow flexibility. A 15-year mortgage comes with lower interest rates (often 0.5% to 0.75% lower) and cuts total interest paid by more than half, but requires significantly higher monthly payments.