When interest rates are falling, homeowners wonder if refinancing their mortgage might lower their monthly mortgage payment or save them interest over the life of the loan. That’s why we created this free mortgage refinance calculator to help you estimate the benefits of refinancing and understand how much you may be able to save by changing your interest rate!
For tips on how to use our home refinance calculator, see the “how to” instructions below. By refinancing, the total finance charges you pay may be higher over the life of the loan.
How are refinance savings calculated?
Our calculator looks at more than your new interest rate when it estimates your mortgage refinance savings. It also takes into account the term of your current and new loans as well as closing costs you might have to pay when you refinance.
Keep in mind that the Mortgage Calculator merely provides an estimate on how much your mortgage payment will be based on the information you provide. The calculator does not take into account your overall financial situation so your actual rate and payment may be higher.
To get a more precise understanding of the comparative benefits of different loan types, speak with a loan advisor at Freedom Mortgage.
How to use our home refinance calculator
You’ll see default values that show you how the mortgage refinance calculator works. To get the most benefit, update these values with numbers that apply to your mortgage. Each time you update a field, the calculator will re-estimate your potential savings. Let’s discuss how the four parts of the mortgage refinance calculator work to help you determine if you should refinance.
- Current Home Loan
To estimate how much you might save by refinancing, the calculator needs to know how much your current mortgage costs are. So it asks for the original loan amount, term (which is the number of years you have to pay back the loan), and interest rate. It will also ask how long you have been paying your current mortgage and if there is a balloon payment. When you are finished, click the triangle next to "New Loan."
- New Home Loan
To estimate potential mortgage refinance savings and let you compare your current loan to a refinanced loan, the calculator also needs information about a new mortgage you might be able to get. Both the new term and new interest rate are important values to input to calculate savings. Note that the term of a new mortgage can have a big impact on how much you might pay each month and how much money you might save on interest over the life of the loan. Input different values for the term to see how the numbers change.
The mortgage refinance calculator also includes default values for closing costs like origination fees, discount points, and other services. You can change these values too. When you refinance your home loan, you pay off your current mortgage and replace it with a new one. Many times getting a new loan means you will pay a new set of closing costs. When you are finished, click the triangle next to "Home Info."
- Home Info
In calculating a home loan refinance, the current appraised value of your home (also called its "fair market value") can affect your decision to refinance your mortgage. The number of years you expect to live in your home is also important to think about. The longer you own your property and loan at a new rate, the more potential interest savings you might realize. When you are finished, click the triangle next to "Taxes & Insurance."
- Taxes & Insurance
Finally, the calculator asks you to input payments for property taxes and homeowner’s insurance. Because these costs are part of many people’s monthly mortgage bills, the calculator needs this information to estimate total payments. The calculator includes default values for your tax and savings rate too.
Have questions about if you should refinance?
Our mortgage refinance calculator can help you decide when to explore your refinancing options and contact Freedom Mortgage. If you would like to talk to our friendly Loan Advisors about refinancing your home loan, please visit our Get Started Page or call 877-220-5533.
Additional mortgage refinance calculator terms
Our mortgage refinance comparison calculator provides detailed estimates of how much you might save by refinancing your mortgage as well as costs that may apply by refinancing. Here are quick explanations of some of the information in these estimates.
Amortization and Amortization Schedule
Amortization is the process of repaying a loan by making regular principal and interest payments. An amortization schedule shows the amount a borrower needs to pay in principal and interest each month to ensure the loan is repaid by the end of its term. Our mortgage refinance calculator shows you estimated payment schedules for your current loan and your new loan based on the information you input. To see these estimated schedules, click "Amortization" on the slider then click the "SEE TABLE" buttons.
Some types of short-term mortgages have a "balloon year" when a large one-time "balloon" payment comes due. These years are usually near the end of the life of the loan. Our mortgage loan refinance calculator takes balloon years into account.
A break-even is the point where the savings from a refinance are equal to the closing costs. Our calculator will show you an estimate of how much time it might take you to break even based on the information you input. To see this estimate, click “Break-even Point” on the slider.
Discount points are fees some lenders may require you to pay to get a lower interest rate when refinancing your mortgage. (This is also called buying down the rate.) One discount point is equal to 1% of the loan amount. For example, one discount point would cost $1,000 on a $100,000 loan.
The interest rate on your home loan is the cost of borrowing money, expressed as a percentage. The interest rate a lender might offer you depends on factors like your credit score, personal finances, and the amount of money you would like to borrow. The mortgage refinance calculator allows you to see how interest rate changes impact your decision to refinance.
These are fees charged by lenders and brokers to process or “originate” a loan. Origination charges can be part of the closing costs of a refinance.
Other settlement services
Other settlement services in the mortgage refinance calculator can include the costs of home appraisals, title searches, and other services you many need to purchase. These services can be part of the closing costs of a refinance.
Our mortgage refinance calculator estimates the total monthly payments of your current loan and your new loan based on the information you input. Your monthly mortgage bill includes the costs for your principal and interest as well as payments for your property taxes and homeowners insurance. The mortgage refinance comparison calculator will show an estimate of your current and new monthly payment. Click the "information icon" (which is the "i" in the blue circle) to see estimates of the total interest you might pay too.
The "term" of a loan is the number of years you have to pay back the money you borrow. When a mortgage has a term of 30 years, that means you have 30 years to pay off the loan. The term of a mortgage can affect the size of your monthly mortgage payment and the total amount of money you might pay in interest over the life of the loan.