When is refinancing worth it?

Refinancing is generally worth it when you can lower your interest rate by at least 0.5-1%, plan to stay in your home long enough to recoup closing costs (past the break-even point), or need to switch from an adjustable-rate to a fixed-rate mortgage. Use the break-even analysis above to see how long it takes for your savings to exceed refinancing costs.

How much does it cost to refinance a mortgage?

Refinancing closing costs typically range from 2% to 5% of the loan amount. For a $250,000 loan, expect to pay $5,000 to $12,500 in fees including appraisal, title insurance, origination fees, and recording fees. Some lenders offer no-closing-cost refinance options, but these usually come with a slightly higher interest rate.

Can I refinance with bad credit?

Yes, but your options may be more limited. FHA Streamline refinances require minimal credit checks if you already have an FHA loan. For conventional refinances, most lenders want a credit score of 620 or higher. The better your credit score, the lower the interest rate you'll qualify for, which directly impacts your savings.

Should I refinance to a shorter loan term?

Refinancing from a 30-year to a 15-year mortgage can save you tens of thousands in interest, but your monthly payment will be higher. This strategy works best if your income has increased and you can comfortably afford the higher payment. Our calculator lets you compare different term options to see the total cost impact.

How long does the refinance process take?

The typical refinance process takes 30 to 45 days from application to closing, though it can vary. Key steps include application, appraisal, underwriting, and closing. Having your financial documents ready (pay stubs, tax returns, bank statements) can help speed up the process.

Discover how much you could save by refinancing your mortgage. Compare your current loan with potential new terms to make an informed decision.

Refinance Calculator

Current Loan

Current Loan Balance$250,000

$50K$1M

Current Interest Rate6.50%

3.0%10.0%

Years Remaining28 years

1 year30 years

Current Monthly Payment$1,580

New Loan

New Interest Rate5.50%

2.0%9.0%

New Loan Term

Closing Costs$5,000

$0$15K

Cash Out Amount$0

$0$100K

New Monthly Payment$1,419

Refinancing Recommended

Based on your inputs, refinancing could save you money.

Your Potential Savings

Monthly Savings

$161

per month

Break-Even Point

2.7 years

Time to recover closing costs

Interest Savings

$19,927

over life of loan

Payment Comparison

Current Payment$1,580

New Payment$1,419

Difference-$161

Total Cost Analysis

Current Loan (remaining)$530,937

New Loan (total)$511,010

+ Closing Costs$5,000

Net Savings$14,927

Tip: Consider refinancing if your break-even point is shorter than how long you plan to stay in the home.

When Should You Refinance?

Good Reasons to Refinance

•Interest rates have dropped significantly (typically 0.5-1% or more)
•Your credit score has improved substantially
•You want to shorten your loan term and build equity faster
•You need to access home equity for important expenses
•You want to switch from an ARM to a fixed-rate mortgage

Reasons to Think Twice

•You plan to move within the next few years
•The rate difference is minimal (less than 0.5%)
•You're far along in your current mortgage term
•Your home value has decreased significantly
•You can't afford the closing costs

Understanding Your Refinance Numbers

Monthly Savings

The difference between your current and new monthly payment. This is immediate cash flow relief each month.

Break-Even Point

How long it takes for your monthly savings to equal your closing costs. Plan to stay in your home past this point.

Interest Savings

Total interest you'll save over the life of the loan compared to your current mortgage.

Common Questions