Mortgage refinance calculator: How much can I save?

A mortgage refinance can serve several financial goals — from reducing your monthly payments to accessing extra cash for important expenses.

• Lower your monthly payments: If interest rates have dropped since you got your mortgage, refinancing can help you secure a lower rate and reduce your monthly payments.
  
• Shorten or change your loan term: A refinance can allow you to switch from a 30-year loan to a 15-year mortgage, which could help you save on long-term interest costs.
  
• Switch from a variable to a fixed rate: If you have an adjustable-rate mortgage (ARM), refinancing to a fixed rate could protect you from future rate increases.
  
• Tap into your home equity: A cash-out refinance lets you borrow against the value of your home to fund renovations, consolidate debt or cover major expenses. This can be a smart move if you need funds for home improvements or for paying off high-interest debt.

Keep in mind that refinancing isn’t just about lowering your rate but creating financial flexibility that works for you.

Be sure you consider the caveats, too. Even if the savings appear worthwhile at current interest rates, you’ll want to consider the paperwork, time commitment and associated costs involved in a refi.

Refinancing a mortgage isn’t free, so factor in the costs before deciding if it’s the right move for you.

Closing costs and fees

Like your original mortgage, a refinance comes with closing costs, which typically range from 2% to 5% of your remaining loan balance. These costs may include:

• Application and loan origination fees charged by the lender for processing the loan
• Appraisal fees and survey costs to determine your home’s value
• Title insurance to protect against ownership disputes
• Discount points to help lower your rate
• Attorney and closing fees to cover the cost of reviewing legal terms
• Loan recording fees to cover the cost of filing with your state or local government

Rolling costs into your loan

Some lenders allow you to roll closing costs into your mortgage so you don’t have to pay upfront, but your loan balance and monthly payments may be slightly higher.

Review all costs

When you refinance, your lender will provide two key documents.

• A Loan Estimate (LE) is an itemized breakdown of all your costs upfront.
• A Closing Disclosure is a summary of your loan details issued three days before closing.Be sure to review both documents carefully to confirm everything matches what you agreed to.

When interest rates drop below what you have now, it could be a good time to refinance. The key is determining your break-even point: How long will it take for your savings to outweigh the refinance costs?

A good rule of thumb is that refinancing makes sense if you plan to stay in your home long enough to recover the costs through lower payments. Carefully review costs and compare them to your potential savings.

When you're ready, connect with a loan officer to guide you on next steps and available options.

For conventional loans

There’s usually no waiting period if you’re refinancing to lower your rate or change your loan term. However, for a cash-out refinance, most lenders require you to have owned your home for at least six months.

For FHA or VA Loans

Government-backed loans typically require a waiting period:

• FHA loans: The usual wait at least six months before refinancing.
• VA loans: The wait time is 210 days (about seven months) from your last mortgage payment.

Refinancing too soon might not always be the best move. Before you refinance, make sure:

• Interest rates are lower than your current rate
• You’ll be in your home long enough to break even on the refinance costs
• Your credit score and financial situation support a better loanIf you’re unsure, a trusted loan officer could help you determine the best timing for your situation.