Refinance Calculator – Should I Refinance – Realtor.com® (2024)

The break-even point is when the price of your refinance equals the savings from the lower interest rate. The break-even point is crucial because it helps borrowers determine whether the refinance is worth the cost in the long run.

A HELOC is a loan secured by the equity in your home. The equity is the portion of your home's value that you own outright, minus any outstanding mortgage debt. You can use a HELOC for various purposes, including home improvements, debt consolidation, and major purchases.

A debt-to-income ratio is a number that lenders use to determine how well a borrower can handle their monthly debts. Your debt-to-income ratio is the number you get when you divide your monthly debt payments by your monthly gross income.

Homeowners insurance is a type of property insurance. It protects you from damage to your home or possessions. Homeowners insurance also provides liability insurance if there are accidents in your home or on the property.

Closing costs are fees paid when the property title transfers from the seller to the buyer. The sold price of a property doesn't include closing costs. Some of the costs can be attorney fees, title fees, taxes, lender costs, and appraisals. Closing costs may range from two to five percent of the sold price. Buyers and sellers can both be subject to closing costs.

A home equity loan is a loan secured by the equity in your home. The equity is the portion of your home's value that you own outright, minus any outstanding mortgage debt. You can use a home equity loan for many things, including home improvements, debt consolidation, and major purchases.

High-interest debt is any debt with an interest rate significantly higher than the average for that type of debt. High-interest debt is difficult to pay off because most of your payments will go towards the interest rather than the principal.

When you refinance your mortgage, lifetime savings is the amount of money you save on interest over the loan term.

Monthly savings is the amount you can save each month by refinancing your mortgage at a lower interest rate. You can calculate this by subtracting your new monthly payment from your old one.

A prepayment penalty clause is usually part of a mortgage contract. It is a fee charged if you significantly pay down or pay off your mortgage before the loan term ends. Prepayment penalties protect lenders against losing money on the loan interest, but they are not allowed on FHA, VA or student loans.

If your down payment is less than 20 percent of your home's purchase price, you may need to pay for mortgage insurance. Mortgage insurance protects your lender from losing money if you default on your loan. Typically, Federal Housing Administration (FHA) and US Department of Agriculture (USDA) loans require mortgage insurance.

Property tax is a tax on a property, such as land or buildings. The amount of tax is based on the property's value and is used to fund local government services.

The mortgage balance is what you have left to pay on the principal amount you borrowed. This balance doesn't include the interest you owe on the loan.

If your down payment is less than 20 percent of your home's purchase price, you may need to pay for mortgage insurance. You can get private mortgage insurance if you have a conventional loan, not an FHA or USDA loan. Rates for PMI vary but are generally cheaper than FHA rates for borrowers with good credit.

Mortgage refinance is the process of replacing your current mortgage with a new loan. Often people do this to get better borrowing terms like lower interest rates. Refinancing requires a new loan application with your existing lender or a new one. Your lender will then re-evaluate your credit history and financial situation.

A tax deduction is an amount deducted from your taxable income, which can lower the amount of taxes you owe. Tax deductions include interest on student loans, mortgage interest, contributions to an individual retirement account (IRA), 401(k), or other retirement plans.

A mortgage term is the length of time you have to repay your mortgage loan. Mortgage terms can range from 15 to 30 years or even longer.

Title insurance protects the lender and homebuyer from losses if the property title is not valid or contested. When you refinance your home with a new lender, they will require new title insurance to protect them. Your original title insurance will continue to protect you while you own the home.