Refinancing your mortgage can be an effective way to lower monthly payments, reduce interest, or pay off your loan faster. However, refinancing also comes with costs and requires careful evaluation to ensure it’s financially beneficial.
The Bankrate Refinance Calculator is a powerful tool that helps homeowners estimate monthly payments, interest savings, and overall refinance costs. By entering your current mortgage details and proposed loan terms, you can see if refinancing makes sense for your financial situation.
Whether you’re looking to take advantage of lower interest rates, shorten your loan term, or access home equity, this calculator provides clear projections and insights to guide your decision-making.
What Is the Bankrate Refinance Calculator?
The Bankrate Refinance Calculator is an online tool designed to:
- Calculate new monthly mortgage payments based on refinanced terms
- Estimate interest savings compared to your existing mortgage
- Determine the break-even point for refinancing (how long it takes to recoup closing costs)
- Compare different loan terms and interest rates
- Factor in closing costs and fees for an accurate assessment
Using these inputs, the calculator provides a detailed picture of potential savings and helps you make informed refinancing decisions.
Why Use the Bankrate Refinance Calculator?
Mortgage refinancing can save thousands of dollars, but miscalculating costs can backfire. This calculator helps you:
- Evaluate if refinancing lowers your monthly payments
- Compare different loan terms (15-year vs 30-year refinances)
- Understand how much interest you can save over time
- Factor in closing costs to determine real savings
- Plan your financial strategy with accurate projections
By offering easy-to-understand results, the calculator helps homeowners make smarter mortgage decisions.
How to Use the Bankrate Refinance Calculator
The calculator is simple to use:
Step 1: Enter Current Loan Details
Include:
- Current mortgage balance
- Current interest rate
- Remaining term of your mortgage
Step 2: Enter Proposed Refinance Details
Include:
- New loan amount (usually the current balance or balance plus fees)
- New interest rate
- New loan term
Step 3: Include Closing Costs
Input estimated fees, such as origination, appraisal, or title costs, to get an accurate total cost.
Step 4: Calculate
Click the calculate button to see:
- New monthly payment
- Total interest on the new loan
- Interest savings compared to your current mortgage
- Break-even point for refinancing
Optional Step: Explore Scenarios
You can test different interest rates, terms, or loan amounts to find the most cost-effective refinancing option.
Example of Refinance Calculation
Example Scenario:
- Current Mortgage Balance: $250,000
- Current Interest Rate: 5%
- Remaining Term: 25 years
- Proposed Refinance Rate: 3.5%
- New Term: 25 years
- Closing Costs: $3,000
Estimated Result:
- New Monthly Payment: $1,253
- Current Monthly Payment: $1,463
- Monthly Savings: $210
- Total Interest Savings: $62,000 over the life of the loan
- Break-even Point: 14 months
Interpretation:
Refinancing in this scenario reduces monthly payments and saves a substantial amount of interest. The break-even point shows you will recover closing costs in just over a year.
Factors Affecting Refinance Decisions
1. Current Interest Rates
Lower rates compared to your existing mortgage make refinancing more attractive.
2. Loan Term
Shortening the term can increase monthly payments but significantly reduce total interest.
3. Closing Costs
Fees can offset savings, so consider the break-even point before refinancing.
4. Loan Amount
Including extra debt (cash-out refinance) affects monthly payments and total interest.
5. Credit Score
Better credit scores qualify for lower rates, increasing potential savings.
6. Remaining Loan Balance
The higher the balance, the more potential you have for interest savings.
Benefits of Using the Bankrate Refinance Calculator
- ✅ Quickly estimates new monthly payments and total interest
- ✅ Calculates interest savings and break-even period
- ✅ Helps compare multiple loan options and rates
- ✅ Provides insight on whether refinancing is financially beneficial
- ✅ Assists in planning for cash-out or term reduction refinancing
- ✅ Helps avoid refinancing pitfalls by factoring in closing costs
Who Should Use This Calculator?
- Homeowners considering lowering mortgage payments
- Borrowers exploring shorter loan terms to save interest
- Individuals evaluating cash-out refinancing options
- Financial advisors helping clients make mortgage decisions
- Anyone wanting to compare refinancing options and potential savings
Tips for Using the Refinance Calculator Effectively
- Include accurate current mortgage balance and rate for precise results
- Factor in all closing costs to calculate real savings
- Compare different loan terms to see how monthly payments and interest change
- Consider cash-out refinances separately to assess affordability
- Use the break-even point to determine if refinancing is worth it
- Periodically check rates if you are waiting for better offers
Bankrate Refinance Calculator vs Manual Calculation
| Feature | Calculator | Manual Calculation |
|---|---|---|
| Speed | Instant | Time-consuming and error-prone |
| Accuracy | Considers rate, term, and closing costs | Prone to errors |
| Scenario Testing | Compare multiple refinance options | Requires manual spreadsheets |
| Visualization | Shows monthly payment, interest savings, break-even | Must be calculated manually |
| Budget Planning | Supports smart financial decisions | Limited without tool |
The calculator simplifies complex refinance calculations, making it easy for homeowners to evaluate options confidently.
Frequently Asked Questions (FAQs)
1. What is the Bankrate Refinance Calculator?
It’s a tool that estimates new mortgage payments, interest savings, and break-even periods for refinancing.
2. Is this calculator free?
Yes, it is completely free to use.
3. Can it calculate interest savings?
Yes, it shows the total interest saved compared to your current mortgage.
4. Does it include closing costs?
Yes, you can input estimated fees to get accurate net savings.
5. Can it calculate break-even points?
Yes, it shows how long it will take to recover closing costs through savings.
6. Can I compare different loan terms?
Yes, you can test multiple terms to find the most cost-effective option.
7. Can it handle cash-out refinancing?
Yes, include the cash-out amount in the new loan to see updated payments and interest.
8. Does it factor in my credit score?
Indirectly, as the interest rate you enter reflects your creditworthiness.
9. Can it help lower my monthly payment?
Yes, refinancing to a lower rate or longer term reduces monthly payments.
10. Can it help shorten my mortgage term?
Yes, you can see how a shorter term affects payments and total interest.
11. Is it mobile-friendly?
Yes, it works on desktop, tablet, and mobile devices.
12. Can it calculate large mortgage balances?
Yes, there is no practical limit on the loan amount.
13. Can I see an amortization schedule?
Some versions of the calculator provide a detailed breakdown of each payment.
14. Can it estimate savings for adjustable-rate mortgages?
It works best with fixed-rate loans; adjustable-rate loans require careful rate assumptions.
15. Can I use it before applying for a refinance?
Yes, it helps determine if refinancing is financially beneficial before committing.
16. Does it include taxes and insurance?
No, it focuses on principal and interest; taxes and insurance are separate.
17. Can it help with financial planning?
Yes, it provides insight for budgeting and strategic mortgage decisions.
18. How accurate is it?
Very accurate for estimating payments and interest based on input rates and terms.
19. Can it calculate savings over different interest rates?
Yes, you can simulate multiple rates to find the best refinancing option.
20. Why should I use the Bankrate Refinance Calculator?
To forecast savings, evaluate options, and make smart, informed refinancing decisions.