Refinance Comparison Tool

Refinancing replaces your existing loan with a new one — usually at a lower interest rate, shorter or longer term, or with cash taken out of equity. The new lender pays off the old loan in full and you begin paying back the new loan on a new amortization schedule. The goal is almost always to lower lifetime cost, lower monthly payment, change rate type (ARM → fixed), or unlock equity.

Refinance when three conditions line up: (1) the new APR is at least 0.5–1.0 percentage points below your current rate, (2) the break-even period (closing costs ÷ monthly savings) is shorter than your expected ownership horizon, and (3) your credit and income are at least as strong as when you originated the loan. The calculator returns a verdict — Strong Refinance Candidate, Good Opportunity, Marginal Benefit, or Not Recommended — based on these signals.

A good refinance rate is one that's at least 0.5–1.0 percentage points below your current note rate after factoring in closing costs (i.e., the new APR, not the new note rate). For most homeowners in 2026, anything that takes a 7%+ existing mortgage to under 6.25% with reasonable closing costs and a sub-36-month break-even is worth a hard look. Watch the APR column in the calculator — it amortizes points and fees into the comparison.

Break-even months = Upfront cost ÷ Monthly savings. If you pay $6,500 in closing costs and the refinance saves $200/month, you break even in roughly 33 months. After that point, every monthly payment you make is pure savings. The calculator computes this automatically and reports a calendar date alongside the month count, plus a cumulative-savings line chart that shows when the curve crosses zero.

Refinance closing costs typically run 2–6% of the new loan amount and include: origination fee (lender's processing charge, 0.5–1% of loan), discount points (each point = 1% of loan, prepaid to lower rate), title insurance and search, appraisal fee, recording and transfer fees, attorney fees in attorney-state closings, and a number of smaller fees (credit report, flood certification, tax service). The Closing Cost Analyzer in this tool breaks out a typical industry-standard mix.

Discount points are an upfront fee you pay the lender to permanently lower your interest rate. One point equals 1% of the loan amount. Each point typically buys 0.25%–0.375% off the rate, but the exact tradeoff depends on the lender's daily rate sheet. Points only make sense if you'll keep the loan long enough to recover the upfront cost through monthly savings — usually 5+ years. Run them in the calculator both with and without points to compare.

Cash-out refinancing replaces your existing mortgage with a new, larger one and gives you the difference in cash at closing. If you owe $200,000 on a home worth $400,000 and refinance for $280,000, you walk away with $80,000 in cash (minus fees). Cash-out is regulated more strictly than rate-and-term refinance: conventional loans typically cap cash-out at 80% LTV, FHA at 80%, and VA up to 90% with full entitlement. Pricing also runs 0.25–0.5 points higher than rate-and-term.

Yes, but usually only briefly. The lender's hard credit pull drops your FICO by a few points temporarily. Closing the old loan and opening a new one also slightly resets your average account age, which can cost a few more points. Both effects fade within 6–12 months. Net long-term effect is usually neutral or slightly positive — especially if the refinance lowers your DTI by reducing monthly payment. Rate-shop within a 14–45 day window to have multiple inquiries scored as one.

Yes — and it's the most common reason people refinance. Lower payments come from a lower interest rate, a longer term, or both. Be careful: extending the term from 25 remaining years to a fresh 30 lowers the payment but can dramatically increase total interest paid over the life of the loan. The calculator shows both the monthly delta and the lifetime cost delta so you see the full picture before signing.

No. Refinancing is a tool, not a default move. It costs money upfront (closing costs + points + sometimes prepayment penalty). For it to be worth it, the new lifetime cost has to be lower than your remaining current cost by enough to clear the break-even point within your expected ownership window. The calculator's verdict — Strong Refinance Candidate, Good Opportunity, Marginal Benefit, or Not Recommended — synthesizes all four signals (monthly savings, lifetime cost, break-even, and holding period) into a single read.