Mortgage Refinance Calculator — Compare Current vs New Mortgage — USA 2026
Calculate if refinancing your mortgage saves money. Compare your current payment with a new loan and see the break-even point and total savings.
Mortgage refinancing replaces your current mortgage with a new one at a potentially lower interest rate or different term. A good rule of thumb is refinancing makes sense when you can reduce your rate by at least 0.50-0.75% and plan to stay in the home long enough to recover closing costs (typically $3000-$10000). With rates fluctuating understanding your exact break-even point prevents costly refinancing mistakes.
When does refinancing make sense?
Refinancing makes financial sense when: monthly savings × months remaining in home > closing costs. If refinancing saves $200/month and costs $6000 your break-even is 30 months. If you plan to stay 5+ years you save $200 × 60 = $12000 minus $6000 costs = $6000 net savings. Do not refinance if you plan to move within 2-3 years.
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Mortgage Refinance Calculator
How This Calculator Works
This calculator uses the standard reducing balance method to compute your monthly payments. The formula takes your loan principal, annual interest rate, and tenure to calculate the exact Equated Monthly Installment (EMI) or payment amount. Each monthly payment consists of two components — principal repayment and interest charges. In the early months, a larger portion goes toward interest, but as your outstanding balance decreases, more of each payment reduces the principal. This is why making extra prepayments in the early years of your loan saves significantly more interest than prepaying later.
Tips to Get the Best Loan Deal
Always compare the Annual Percentage Rate (APR) rather than just the advertised interest rate, as APR includes processing fees, insurance charges, and other costs. Negotiate your processing fee — most banks will reduce or waive it if you ask. Choose the shortest tenure your budget allows since longer tenures dramatically increase total interest paid. Check prepayment terms before signing — RBI mandates zero prepayment penalty on floating rate home loans in India. Finally, maintain a credit score above 750 to qualify for the best rates from any lender.
Key Information
| Parameter | Details |
|---|---|
| Typical Closing Costs | $3000 - $10000 (2-5% of loan) |
| Break-Even Rule | Monthly savings × months = closing costs |
| Rate Reduction Sweet Spot | 0.50% - 0.75% minimum |
| No-Cost Refinance | Higher rate but zero closing costs |
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Use Calculator NowFrequently Asked Questions
When does refinancing make sense?
Refinancing makes financial sense when: monthly savings × months remaining in home > closing costs. If refinancing saves $200/month and costs $6000 your break-even is 30 months. If you plan to stay 5+ years you save $200 × 60 = $12000 minus $6000 costs = $6000 net savings. Do not refinance if you plan to move within 2-3 years.
Can I refinance with no closing costs?
Yes no-cost refinancing exists but is not truly free. The lender rolls closing costs into a slightly higher interest rate (typically 0.125-0.25% higher). This eliminates upfront costs but reduces monthly savings. No-cost refinancing makes sense if you might sell or refinance again within 3-5 years since you never need to recoup closing costs.
Should I refinance to a shorter term?
Refinancing from 30-year to 15-year increases monthly payments but dramatically reduces total interest. On a $300000 loan: 30-year at 7% = $1996/month total interest $418560. 15-year at 6.5% = $2613/month total interest $170340. You pay $617 more monthly but save $248220 in interest. Only do this if the higher payment is comfortably affordable.
What is PMI and when can I remove it?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI typically costs 0.5-1% of the loan amount annually and is added to your monthly payment. You can request PMI removal once your equity reaches 20% of the original home value, or it automatically drops at 22% equity.
How does a 30-year vs 15-year mortgage affect payments?
A 15-year mortgage has higher monthly payments but dramatically lower total interest. For a $300,000 loan at 6.5%, the 30-year option costs $1,896/month with $382,633 total interest, while the 15-year costs $2,613/month with only $170,389 total interest — saving you over $212,000. Choose 15-year if you can afford the higher payment.
What credit score do I need for a mortgage?
Conventional loans typically require a minimum score of 620, FHA loans accept 580 (or 500 with 10% down). A score above 740 qualifies you for the best rates. Each 20-point increase in your score can save 0.25% on your rate, which translates to thousands of dollars over the life of the loan.
How much down payment do I need to buy a house?
Conventional loans require 3-20% down. FHA loans accept as low as 3.5%. VA loans offer 0% down for eligible veterans. Putting less than 20% down means paying PMI. A larger down payment reduces your monthly payment, total interest, and may qualify you for better rates.
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Last updated: March 2026