Mortgages / Refinance Calculator
Use Zillow's refinance calculator to determine if refinancing may be worth it. Enter the details of your existing and future loans to estimate your potential refinance savings. This free refinance calculator can help you evaluate the benefits of refinancing to meet your financial goals, such as lowering monthly payments, changing the length of your loan, cancelling your mortgage insurance, updating your loan program or reducing your interest rate.
Compare the latest refinance rates from multiple lenders.
Discuss your refinancing goals with a lender near you.
Refinancing a mortgage is the process of replacing your existing loan by acquiring a new home loan in its place that suits your financial circumstances. The funds from your new mortgage pay off your existing mortgage.
Just like acquiring your purchase mortgage, you’ll need to gather your supporting documentation such as your recent pay stubs, W-2s, and bank statements. But you’ll also need details about your existing mortgage, including the remaining loan amount, the number of years left to pay and the interest rate. This information helps you and your lender calculate the best refinance loan option for your financial situation
Average refinance closing costs range between 2%-6% of the loan amount. Closing fees vary depending on your location, loan type, loan size and mortgage lender.
Most lenders allow you to roll the closing costs of the refinance into the balance of your new loan, increasing the total amount borrowed. Apply with at least three lenders and obtain official Loan Estimates to compare loan costs and savings. Work with lenders to complete a cost-benefit analysis and determine whether refinancing makes sense for you.
Here is a list of common refinance fees you might see associated with your refinance loan:
To calculate the value of refinancing your home, compare the monthly payment of your current loan to the proposed payment on the new loan. Then use an amortization schedule to compare the principal balance on your proposed loan after making the same number of payments you’ve currently made on your existing loan. Both the monthly payment and principal balance of the new loan should be lower. Enter your specific details into the refinance calculator above for a detailed savings breakdown.
Typically, it is worthwhile to refinance if the reduction in total interest expected to be paid over the life of the loan is greater than the cost of acquiring the loan.
Monitor refinance rates regularly and use Zillow’s free refinance calculator to make sure a refinance is worth it for your financial circumstances.
Use a mortgage refinance calculator to determine the breakeven point, which is the number of months it takes for the savings to outweigh the cost of refinancing. Divide the breakeven timeframe (months) by 12 to calculate the number of years you need to make payments on the loan before realizing any savings from the refinance. If you plan to sell before the breakeven point, it is probably not financially worth it to refinance.
Mortgage payments are amortized, meaning your mortgage total remains the same each month, but the amount of principal and interest varies with each payment. Amortization ensures you pay more interest than principal during the first half of your loan term. Refinancing restarts your mortgage amortization schedule with the new loan, reducing the amount of principal you’re paying each month. If you plan to sell your home soon or if you’ve been paying your mortgage for more than half of the term, be sure to use a loan refinance calculator.
Refinancing can help you meet your financial goals. Explore the most common reasons you might consider refinancing your mortgage.
Reducing the interest rate is by far the most popular reason to refinance a mortgage. If you can qualify for a lower rate than your existing mortgage interest rate, refinancing can reduce your monthly mortgage payments or potentially save thousands in interest over the life of your loan.
When you refinance, you can select a different loan type. For example, if you have an adjustable-rate mortgage (ARM) and the rate is about to increase, you can change to a more stable fixed-rate mortgage.
When you purchase a home with less than 20% of the home price as your down payment, you'll likely pay private mortgage insurance (PMI) or a mortgage insurance premium (MIP), common with conventional and FHA loans, respectively. If you've gained equity of at least 20%, whether by appreciation or by simply paying your mortgage, you may be able to refinance to cancel mortgage insurance and save money with each monthly payment.
In most cases, shortening your loan term allows you to pay off your principal faster. A shorter term often means you'll have a higher monthly payment but fewer overall payments, reducing interest over the life of your loan. Additionally, shorter-term loans (i.e. 15-year fixed) typically have lower interest rates than those with longer terms (i.e. 30-year fixed).
You can also speed up your loan repayment to a bi-weekly cadence, which many lenders allow. Bi-weekly payments equate to one extra payment each year and 51 fewer months on a 30-year loan. This ultimately reduces the amount of interest you pay. Before signing, confirm a bi-weekly payment option with your lender.
Refinancing typically resets the length of your mortgage to 15 or 30 years. Your current principal balance stretches across the additional payments, reducing your monthly cost. If you have a lump sum to apply to your existing mortgage amount, try a cash-in refinance which reduces monthly payments further. The cash decreases the balance which is then spread across additional payments.
If you have enough equity in your home, you may be able to do a cash-out refinance. With cash-out refinancing, you refinance your current home loan for more than the amount you currently owe and keep the extra money to spend on things like home projects or paying off other high-interest debt. Cash-out refinances typically have higher interest rates. In the "advanced settings" on the refinance calculator you can convert the tool to a cash-out refinance calculator.
You can refinance your home countless times, though some lenders have their own limits. Be sure to use a refinance calculator every time to understand the long-term cost or savings of the home loan.
Borrowers with credit scores of 620 or greater may be eligible to refinance their home, but credit scores of 740 or higher receive the most favorable refinance interest rates. The higher your credit score the lower your refinance interest rate, so it's beneficial to have a healthy credit score. Calculate your estimated savings at varying interest rates to see if it's worthwhile to wait and improve your credit score before refinancing.
Expect a minimum requirement of home equity if you hope to cancel mortgage insurance, usually 20%. Otherwise, refinance equity requirements vary by loan program and property type. Typically rate-and-term refinances have fewer restrictions on equity requirements compared to cash-out refinances.
No closing cost refinances are simply mortgage refinances with closing costs rolled into the loan. While you won't pay your closing costs out-of-pocket at the time of closing, doing so will typically increase your total amount borrowed and monthly payments.
The process of refinancing will follow these typical steps:
Select a type of mortgage refinance: You have many refinancing options, including refreshing your rate and term (rate-and-term refinance), applying more cash toward your equity (cash-in refinance), pulling money out of your home equity (cash-out refinance), or opting for a streamline refinance to lower your monthly payments.
Shop refinance rates: Compare different interest rates using the custom rates tool or refinance calculator above to determine if refinancing at a current rate would accomplish your refinancing goals. Contact the lender, or find a lender to work with in your area.
Apply for a refinance: Once you apply, your lender will provide you with initial disclosures that outline the terms of the loan. Read and sign.
Lock your refinance rate: Work with your lender to lock your interest rate when you believe it's the lowest.
Complete a home appraisal: Most lenders require a home appraisal.
Close your loan: Review the closing documents and disclosures, pay any applicable closing costs, and sign.
Learn how to find the best refinance rate and discover the questions you should ask before you refinance.
How to refinance with bad credit
If you want to refinance your mortgage but have bad or poor credit, this guide can help you explore your options
Want to tap into your home equity? Find out if a HELOC, home equity loan or cash-out refinance is best for you.
