Thinking about refinancing? Use this mortgage calculator refinance calculator tool to determine your new monthly payment and see how changing your rate or term affects your financial outlook.
Refinance Calculator
Mortgage Calculator Refinance Calculator Formula
Refinancing essentially creates a new mortgage to pay off your existing one. The formula to determine your new monthly obligation is the standard amortization equation:
Variables
- M: New Monthly Principal & Interest Payment.
- P: New Principal Amount (Outstanding Balance + Closing Costs if rolled in).
- i: New Monthly Interest Rate (New Annual Rate / 12).
- n: New Total Number of Payments (New Term in Years × 12).
Related Calculators
- Refinance Breakeven Calculator
- Cash-Out Refinance Calculator
- 15 vs 30 Year Mortgage Calculator
- Closing Cost Estimator
What is Mortgage Calculator Refinance Calculator?
A mortgage calculator refinance calculator is a tool designed to help homeowners evaluate the financial impact of replacing their current mortgage with a new one. Refinancing is often pursued to secure a lower interest rate, shorten the loan term, or tap into home equity (cash-out refinance).
This calculator focuses on the “New Loan” aspect. By inputting the remaining balance of your current mortgage (as the new loan amount) along with the proposed interest rate and term, you can instantly see what your future monthly commitment will look like. Comparing this result to your current statement helps determine if refinancing provides enough monthly savings to justify the closing costs.
How to Calculate Mortgage Calculator Refinance Calculator (Example)
Consider a homeowner looking to switch from a 30-year loan to a 15-year loan to pay off debt faster:
- Refinance Amount (P): The remaining balance on the current home is $200,000.
- New Rate (r): The lender offers a rate of 5.0%.
- New Term (t): The new loan will be for 15 years.
- Convert Rate: Monthly interest $i = 0.05 / 12 = 0.004167$.
- Total Months: $n = 15 \times 12 = 180$.
- Result: The new monthly payment calculates to approximately $1,581.59.
Frequently Asked Questions (FAQ)
Generally, if you can lower your interest rate by 0.75% to 1.0%, refinancing is worth considering. However, you must calculate the “breakeven point”—the time it takes for your monthly savings to exceed the closing costs of the new loan.
This calculator determines the payment based on the “Loan Amount” you enter. If you plan to roll closing costs (typically 2-5% of the loan) into the mortgage, you should add them to your input amount for an accurate payment estimate.
Refinancing from a 30-year to a 15-year term usually increases your monthly payment because you are paying principal back faster, but it significantly reduces the total interest paid over the life of the loan.
A cash-out refinance involves taking out a new mortgage for more than your previous mortgage balance and receiving the difference in cash. This increases your total debt but provides liquid funds for renovations or debt consolidation.