Am I Better Off Refinancing?

As interest rates and personal finances change, it’s a good idea to periodically review your mortgage to ensure it still aligns with your financial goals.

This refinance calculator can help you determine if a new loan could save you money by lowering your monthly payment or reducing your total interest cost.

Input your current loan details and compare potential new loan scenarios to see your potential monthly and long-term savings.

Original Loan Amount

Original Interest Rate

Original Loan Term

Time Paid (years)

Time Paid (months)

New Loan Amount

New Interest Rate

New Loan Term

Cash-Out?

Cash Out Amount

Enter your loan details to see if refinancing makes sense.

Monthly Payment Comparison

Total Interest Paid Comparison

Should I Refinance My Mortgage?

Whether you should refinance depends on a number of factors, including your current interest rate, your financial goals, your home’s equity, and the closing costs for a new loan. A refinance isn't right for everyone, but it can be a powerful financial tool for those who are able to take advantage of it. Our refinance calculator provides a clear comparison between your current mortgage and a new one.

How To Use Our Refinance Calculator

Wondering if you should refinance your mortgage? Input the following information into each section of the calculator to get your detailed results.

Current Loan Details

Original Loan Amount. The amount you originally borrowed for your home.
Original Interest Rate. The annual interest rate on your current loan.
Original Loan Term. The full length of your current mortgage loan in years.
Time Paid. How many years and months you have been paying on the current loan.

New Loan Details

New Loan Amount. The total amount you intend to borrow with the new refinance loan. This usually includes your current remaining mortgage balance and may include additional funds if you select a 'Cash Out Amount'.
New Interest Rate. The annual interest rate for the refinanced loan.
New Loan Term. The full length of the refinanced loan in years.
Cash Out Amount. Additional money you may wish to borrow against your home’s equity during a refinance.

Extra Payments On New Loan

Extra Payment Frequency. How often you’re able to make extra payments, either once, annually, semi-annually, quarterly, or monthly.
Extra Payment Amount. How much each extra payment will be.
Begin In Year/Month. At what point in the life of the loan you’re able to start making extra payments.
End In Year/Month. When, in the life of the loan, you plan to cease making extra payments.

Is It Worth It? Understanding Your Results

The refinance calculator gives you a detailed breakdown of your potential savings and costs.

New Monthly Payment: See a side-by-side comparison of your current and proposed mortgage payments.
Total Interest Paid Comparison: By refinancing to a different interest rate or loan term, see how much you might save, or pay, in total interest over the life of the new loan compared to your current one.
Interest Paid Over Time: See how much interest you pay on your original loan schedule compared to how much you might save with a refinance or by making extra payments.
Loan Balance Over Time: Watch how refinancing your loan or making extra payments decrease the principal balance owed on the loan over the life of the loan, compared to the original schedule.
Amortization Schedule: Check the new amortization schedule with your refinance and/or extra payments included.

After you’ve found a scenario that works for you, reach out to a Pennymac Loan Expert. They are happy to walk you through the process and provide a personalized rate quote.

When Does It Make Sense to Refinance?

People refinance for many reasons. Lenders will look for a solid credit history, manageable debt, and sufficient home equity, but your personal motivation is what matters most. Common goals for refinancing include:

Lowering Your Interest Rate and Monthly Payment: This is the most common reason. If current market rates are significantly lower than your rate, you could save a substantial amount each month.
Shortening Your Loan Term: Switching from a 30-year to a 15-year term can help you pay off your home much faster and save thousands in total interest, though your monthly payment may increase.
Cashing Out Home Equity: A cash-out refinance allows you to borrow more than you currently owe and take the difference in cash, which can be used for home improvements, debt consolidation, or other large expenses.
Switching from an Adjustable-Rate to a Fixed-Rate Mortgage: Gaining the stability of a fixed interest rate can provide peace of mind and predictable monthly payments.

What Are the Costs of Refinancing?

Refinancing is not free; you will have to pay closing costs, just as you did with your original mortgage. These costs typically range from 2% to 5% of the new loan amount and cover fees for:

Loan origination and application
Home appraisal
Title search and insurance
Credit report and other administrative services

It is essential to factor these costs into your decision, which is why understanding your break-even point is so critical.^*

^*By refinancing your existing loan, your total finance charges may be higher over the life of the loan.

How Much Equity Do I Need to Refinance?

Generally, lenders require you to have at least 20% equity in your home to refinance, which corresponds to a loan-to-value (LTV) ratio of 80%. However, some loan programs, such as the FHA Streamline Refinance or VA Interest Rate Reduction Refinance Loan (IRRRL), may have more flexible equity requirements. The more equity you have, the more favorable your loan terms are likely to be.