Refinance Calculator.

Mortgage refinancing involves replacing your current loan with a new one that better aligns with your financial needs. The new loan pays off your existing mortgage.

Just like when you first applied for a mortgage, you’ll need to gather documents like recent pay stubs, W-2s, and bank statements. You’ll also need details about your current mortgage, including the remaining balance, loan term, and interest rate. This information helps you and your lender find the best refinancing option for your situation.

Explore the most common reasons to consider refinancing your mortgage.

Lower Interest Rate

Reducing the interest rate is the most popular reason to refinance. If you qualify for a lower rate than your current mortgage, refinancing can lower your monthly payments and potentially save thousands over the loan’s life.

Switch Rate Type: Adjustable vs. Fixed

Refinancing lets you change your loan type. For example, switch from an adjustable-rate mortgage (ARM) to a more stable fixed-rate mortgage if your ARM rate is about to increase.

Cancel Mortgage Insurance

If you purchased your home with less than a 20% down payment, you likely pay private mortgage insurance (PMI) or a mortgage insurance premium (MIP) with FHA loans. If you’ve gained at least 20% equity, consider refinancing to cancel mortgage insurance and save on monthly payments.

Pay Off the Loan Faster

Shortening your loan term allows you to pay off your principal faster. This means higher monthly payments but fewer total payments, reducing interest over the loan’s life. Shorter-term loans often have lower interest rates than longer-term loans.

You can also speed up repayment with bi-weekly payments, which equate to one extra payment per year, reducing your loan term by about 51 months on a 30-year loan. Confirm this option with your lender.

Reduce Monthly Payments

Refinancing usually resets your mortgage term to 15 or 30 years, spreading your principal balance over more payments and lowering monthly costs. A cash-in refinance can reduce payments further by applying a lump sum to your balance.

Withdraw Cash

If you have enough equity, a cash-out refinance lets you refinance for more than you owe and keep the extra cash. Use it for home projects or paying off high-interest debt. Note that cash-out refinances typically have higher interest rates. Use the “advanced settings” on the refinance calculator to convert it to a cash-out refinance calculator.

Refinance closing costs usually range from 2%-6% of the loan amount and vary by location, loan type, size, and lender.

Most lenders let you roll these costs into your new loan balance, increasing the total amount borrowed. Apply with at least three lenders and get official Loan Estimates to compare costs and savings. Work with lenders to complete a cost-benefit analysis and see if refinancing is right for you.

Common refinance fees

Here is a list of common refinance fees you might see associated with your refinance loan:

• Lender fees
• Credit report fee
• Appraisal fees
• Title search, title report, and title insurance policy
• Title/Attorney (at signing)
• Transfer taxes (state specific)
• Escrow fees
• Flood certification
• Recording fee
• Property tax fees
• Homeowners insurance fees
• Prepaid interest

To calculate your refinance savings, compare your current loan’s monthly payment with the proposed new payment. Use an amortization schedule to see the principal balance of the new loan after the same number of payments as your existing loan. Both the new payment and principal balance should be lower. Enter your details into the refinance calculator above for a detailed breakdown of your savings.

Refinancing makes sense if the savings on interest over the loan’s life outweigh the costs of getting the new loan. Keep an eye on refinance rates and use Kassa’s free refinance calculator to see if it’s the right financial move for you.

Refinancing is often done to lower monthly mortgage costs, but it’s important to consider the full picture. A mortgage’s monthly cost includes more than just principal and interest—use our mortgage calculator to see it all. Timing is crucial when refinancing.

Timing Matters

Refinancing involves upfront costs, so ensure you’ll keep the new mortgage long enough to recoup those expenses and then benefit from the savings. For example, refinancing and then selling your home within a year might not make sense, as you wouldn’t have recouped the costs.

Weigh the Costs

Refinancing typically costs between 2%–5% of your loan amount. Make sure to factor this into the “Cost of refinance” section of our refi calculator to get a clear view of your potential savings.

How often can you refinance your home?

You can refinance your home as many times as you’d like, though some lenders may have their own restrictions. Always use a refinance calculator to understand the long-term costs or savings each time you refinance.

What credit score is needed to refinance?

Typically, a credit score of 620 or higher is required to refinance, but scores of 740 or above will get you the best interest rates. The higher your score, the lower your rate. Use the calculator to see if it’s worth improving your credit before refinancing.

How much equity do you need to refinance?

You’ll generally need at least 20% equity to cancel mortgage insurance, but the exact requirement varies by loan type. Rate-and-term refinances usually have fewer equity restrictions than cash-out refinances.

What is a no closing cost refinance?

This type of refinance rolls your closing costs into the loan, so you don’t pay upfront. However, this increases your total loan amount and monthly payments.

How does refinancing work?

Refinancing typically involves these steps:

1. Choose your refinance type: Options include rate-and-term, cash-in, cash-out, or streamline refinancing.

2. Shop rates: Compare rates using the refinance calculator to find the best deal.

3. Apply for a refinance: Your lender will provide initial disclosures to review and sign.

4. Lock in your rate: Work with your lender to secure your interest rate.

5. Get an appraisal: Most lenders require a home appraisal.

6. Close the loan: Review the closing documents, pay any closing costs, and sign.