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How to Use Our Refinance Calculator

3 min read

How to Use Our Refinance Calculator

Refinancing can save you thousands, but only if the numbers work. Our Refinance Calculator tells you whether refinancing makes financial sense for your situation.

What to Enter

Current Loan:

  • Remaining Balance -- What you still owe on your existing loan.
  • Current Interest Rate -- Your existing loan's rate.
  • Remaining Term -- How many months are left on your current loan.
  • Current Monthly Payment -- What you pay now.

New Loan:

  • New Interest Rate -- The rate you have been offered for refinancing.
  • New Loan Term -- The term for the new loan (often 15 or 30 years).
  • Closing Costs -- Refinancing is not free. Expect 2-5% of the loan amount in closing costs.

Understanding the Results

Monthly Savings -- How much less you will pay each month with the new loan.

Break-Even Point -- The number of months until your monthly savings cover the closing costs. If you plan to stay in the home beyond this point, refinancing makes sense. If not, you may lose money.

Total Interest Savings -- The total interest saved over the life of the new loan compared to staying with the current one.

The Rule of Thumb

Refinancing typically makes sense when you can lower your rate by at least 0.75-1.0 percentage point and you plan to stay in the home past the break-even point. A rate drop from 7% to 5.5% on a $300,000 loan can save over $100,000 in interest on a 30-year term.

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