15 Refinance Calculator
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Reviewed by Calculator Editorial Team
Use this 15-year refinance calculator to determine if refinancing your mortgage is a good financial decision. Compare your current mortgage terms with potential new terms to see if you can save money by lowering your interest rate or extending your loan term.
How to Use This Calculator
Enter your current mortgage details and potential new mortgage terms to calculate the potential savings from refinancing. The calculator will show you:
- Your current monthly payment
- Your potential new monthly payment
- The difference in monthly payments
- The total interest paid over the life of the loan
- A comparison chart showing your payment schedule
Use the results to decide whether refinancing is right for you. Remember to consider factors like closing costs, fees, and the length of time you plan to stay in your home.
How Refinancing Works
Refinancing a mortgage involves replacing your current mortgage with a new one, typically with better terms. There are two main types of refinancing:
Rate-and-Term Refinancing
This type of refinancing allows you to:
- Lower your interest rate
- Change the length of your loan term
- Convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage
The most common rate-and-term refinancing option is switching from a 30-year mortgage to a 15-year mortgage.
Cash-Out Refinancing
Cash-out refinancing allows you to:
- Take out additional cash from your home's equity
- Use the cash for home improvements, debt consolidation, or other expenses
- Often comes with higher interest rates and fees
This type of refinancing is riskier because you're borrowing more money against your home.
Mortgage Payment Formula
The formula for calculating your monthly mortgage payment is:
M = P [ i(1 + i)n ] / [ (1 + i)n - 1 ]
Where:
- M = Monthly payment
- P = Principal loan amount
- i = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (loan term in years multiplied by 12)
Benefits of Refinancing
Refinancing can offer several financial benefits, including:
- Lower monthly payments: If you refinance to a shorter term or lower interest rate, your monthly payments may decrease.
- Reduced interest costs: Lowering your interest rate can save you thousands over the life of your loan.
- Access to home equity: Cash-out refinancing allows you to tap into your home's equity for other expenses.
- Better loan terms: You may qualify for a lower interest rate or more favorable loan terms than your current mortgage.
Before refinancing, consider the costs and benefits carefully. Closing costs, fees, and other factors can affect whether refinancing is truly beneficial for your situation.
When to Refinance
Consider refinancing when:
- Interest rates have dropped significantly
- You have good credit and can qualify for a lower rate
- You plan to stay in your home for the long term
- You need access to cash for home improvements or other expenses
When Not to Refinance
Avoid refinancing when:
- You're planning to sell your home soon
- You have high closing costs or fees
- You're not sure you'll stay in your home long enough to benefit
- You have an adjustable-rate mortgage (ARM) with a low initial rate
Example Calculation
Let's look at an example to see how refinancing can work. Suppose you currently have a 30-year mortgage with these terms:
| Loan Amount | Interest Rate | Loan Term | Monthly Payment |
|---|---|---|---|
| $200,000 | 5.5% | 30 years | $1,107.76 |
If you refinance to a 15-year mortgage with a 4.5% interest rate, your new monthly payment would be:
| Loan Amount | Interest Rate | Loan Term | Monthly Payment |
|---|---|---|---|
| $200,000 | 4.5% | 15 years | $1,534.32 |
In this example, your monthly payment would increase by $426.56, but you'd pay off your loan in half the time. Over 15 years, you'd save significantly on interest costs.
Total Interest Paid Comparison
Current 30-year mortgage:
Total interest paid = $332,328
New 15-year mortgage:
Total interest paid = $185,144
Difference = $147,184 saved
Frequently Asked Questions
What is a 15-year refinance?
A 15-year refinance is a mortgage refinancing option that allows you to replace your current mortgage with a new loan that will be paid off in 15 years instead of the original term (typically 30 years). This can result in lower monthly payments if you qualify for a lower interest rate.
How much can I save with a 15-year refinance?
The amount you can save depends on several factors, including your current interest rate, the new interest rate you qualify for, and the amount of your loan. Generally, refinancing to a 15-year term can save you thousands in interest payments over the life of the loan.
What are the risks of refinancing?
The main risks of refinancing include higher monthly payments, closing costs, and fees. If you refinance to a shorter term, your monthly payments may increase. Additionally, you'll need to pay closing costs and other fees, which can offset some of the savings.
Can I refinance if I have an adjustable-rate mortgage (ARM)?
Yes, you can refinance an ARM, but it's important to consider the current interest rate and the potential for rate increases in the future. Refinancing an ARM to a fixed-rate mortgage can provide more stability in your monthly payments.
What should I consider before refinancing?
Before refinancing, consider your financial situation, the costs involved, and whether you'll benefit from the new loan terms. It's also important to consider whether you plan to stay in your home long enough to benefit from the refinancing.