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Mortgage Refinance Calculator

Have rates dropped since you bought your home? Amplify's Mortgage Refinance Calculator can show you how much money you'll save by refinancing.

Refinancing your home mortgage has the potential to save you thousands over the course of your home loan. However, in some instances, refinancing to get a lower interest rate may end up costing you more than you expect.

The only way to figure out if refinancing your mortgage is worth it is to roll up your sleeves and do the math. We built the Mortgage Refinance Calculator to help homeowners see if refinancing a home is right for them. 

Fill out both your current loan information and the specifics of the new loan. The calculator will show you the differences in the monthly payments, the outstanding interest on both loans, and how long it will take a borrower to reach the break-even point over the life of the loan.

Terms to Know for the Mortgage Refinance Calculator

Not sure how to fill out the information in the calculator? Here are a few of the terms found in the calculator with some more information on how they can help you plan your refinance.

Mortgage refinance

Taking out a new mortgage to replace your existing mortgage is called a refinance. People refinance for many reasons, but the most popular is to get a new loan with a lower interest rate. This lower refinance rate can save some homeowners thousands in interest payments. Others may refinance to replace their adjustable-rate mortgage with a fixed rate or lengthen their loan term to lessen the monthly payment burden.

Even in a competitive refinance market, saving money is not a guarantee. If you’re not careful, you may never reach your break-even point. This is why it is important to sit down with a lending officer prior to refinancing. Speaking to someone who understands both your existing loan and the current market will ensure you are making the right financial decisions.

Break-even point

Anytime you take out a new loan, there will be upfront costs. The break-even point is when your savings equal these additional costs. Because of this, the break-even point is one of the most important factors in deciding whether or not to refinance your existing mortgage.

For instance, say your loan refinancing closing costs are $4,000. But thanks to your refinancing, you are saving $200 a month on your mortgage payment. It will take you 20 months to recoup the $4,000 you spent upfront for the refinance— your break-even point. 

Other costs (closing costs)

Just like your original loan, your refinance will come with closing costs. In the calculator, this is referred to as “Other Costs”. Closing costs are the general term for fees such as:

  • Loan application fee
  • Loan underwriting and the origination fee
  • Home appraisal
  • Title search/insurance fee
  • Credit report fee
  • Settlement fee
  • Mortgage points

Typically, these costs range from 2% to 6% of the loan amount. While not inconsequential, closing costs will likely not be the deciding factor in your decision to refinance.

Loan amount

This is the amount of money that you are borrowing from the bank. Keep in mind that the loan amount is not the home’s purchase price; it is only the amount that the bank funds. Under “Current Loan Information”, “enter the initial loan amount, not the current balance.

When refinancing your home, your new loan amount will be the amount you still owe on your current loan. Some homeowners take out a larger loan on their refinance, pocket the difference, and use it for things like home renovations or education expenses. This is called a cash-out refinance. (Note: This calculator does not compute information for cash-out refinances.) 

Loan rate

The interest rate, sometimes referred to as the loan rate, is what a lender charges you in exchange for being able to borrow their money. It’s calculated as a percentage of your total loan amount and added to the loan’s principal balance.

With mortgages and other types of loans, interest compounds, meaning that you’ll end up paying more than just X% on the total loan amount. Say you have two loans for the same amount with the same interest rate, but one has a 15-year term and the other a 30-year term. Because you are borrowing over a longer period with the 30-year loan, the interest has more time to compound, meaning you’ll pay more.

Loan term

The loan term is the length of your home mortgage. Mortgages are typically repaid over a 30-year, 20-year, or 15-year period. 

When refinancing, most opt for the standard “rate and term refinance”, which starts you over with a fresh loan term. For example, you have a 30-year mortgage and decide to refinance your home after 10 years of making payments. If you refinance it with another loan with a 30-year term, you now have 30 years left of payments, not 20.

Monthly payment

Mortgages are paid back monthly through a monthly payment. Monthly payments have four main components: principal, interest, taxes, and insurance. However, for the sake of the calculator, only principal and interest are considered.  

Months paid

This is the number of monthly loan payments you've completed under your current mortgage. It allows the calculator to determine how much of your principal balance you’ve paid down and how much you still owe.

Outstanding interest

Outstanding interest is the interest that has not yet been paid (but will be) over the course of the loan. When using a refinance calculator, this is one of the biggest things to look at since it is an indicator of long-term savings. 

Oftentimes, people see a lower monthly payment and automatically equate that to overall savings. However, it is possible to have a lower interest rate and a lower monthly payment and still end up paying more in the long run. This is why it is important to pay attention to the outstanding interest still present on your existing loan.

Points

Mortgage points, which may also be referred to as discount points, are a type of fee paid to the lender at the time of closing. Purchasing points is often called “buying down the rate” since each point purchased lowers your mortgage’s interest rate by a quarter of a percent. One point will cost 1% of your mortgage amount. 

For example, if you have a $100,000 mortgage with a 4.5% interest rate, one point will cost $1,000. That point, however, will lower your rate to 4.25%. While you pay $1,000 up front, you can potentially save thousands in interest.

More Calculators

Looking for more tools to help get your finances in order? Check out Amplify Credit Union’s Financial Calculators page for calculators that will help you do the math with everything from retirement to debt consolidation to saving for college.

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