Refinancing Calculator

Compare your current loan terms with new market rates. Find out exactly how much you can lower your monthly payments and how much you'll save over the life of the loan.

Refinance Details

New Monthly Payment
$377.42
Current Monthly Payment $400.00
Savings Per Month $22.58
Total Term Savings $1,354.80
Current
Refinanced

How This Refinancing Calculator Works

This tool helps you calculate how much you can save by refinancing your loan. It compares your current interest rate and monthly payments with a new interest rate, providing you with the savings on your monthly payments and total loan costs.

1. Input Your Loan Details

To start, input your Current Loan Amount, Current Interest Rate, and New Interest Rate. The tool will then calculate how much you could save by refinancing.

2. Understanding the Formula

The savings from refinancing come from the difference in the interest rate. We use the standard amortization formula to calculate the new monthly payment:

$M = P \frac{i(1 + i)^n}{(1 + i)^n - 1}$
  • M — New Monthly Payment.
  • P — Principal Loan Amount.
  • i — New Monthly Interest Rate.
  • n — Number of months (Loan Term).

What the Results Show You:

  • Monthly Payment: The amount you will pay after refinancing your loan.
  • Savings Per Month: The difference between your current payment and the new payment.
  • Total Savings: The total amount saved over the life of the loan.

*Note: This tool does not include other potential costs or fees associated with refinancing. Be sure to check with your lender for all details.

Refinancing FAQ: Key Information

What is refinancing?
Refinancing is the process of replacing an existing loan with a new loan that typically has better terms, such as a lower interest rate or a more favorable loan term. This can reduce your monthly payment, shorten the length of the loan, or help you save on interest.
How can refinancing save me money?
Refinancing can save you money by lowering your interest rate, which reduces the total interest you pay over the life of the loan. It can also reduce your monthly payment by extending the loan term or changing your loan type.
When should I consider refinancing my loan?
You should consider refinancing if interest rates have dropped since you took out your original loan, if your credit score has improved, or if you want to change the loan term. Refinancing is also beneficial if your current loan is no longer affordable due to high monthly payments.
Are there any fees associated with refinancing?
Yes, refinancing can involve fees such as application fees, appraisal fees, and closing costs. Be sure to calculate these costs and factor them into your savings to ensure that refinancing will be beneficial in the long term.
How does refinancing affect my credit score?
Refinancing can have a temporary negative effect on your credit score due to the credit inquiry. However, if refinancing lowers your debt-to-income ratio or improves your payment history, it could positively affect your score over time.
Will refinancing shorten the length of my loan?
Refinancing can shorten the length of your loan if you choose a loan term that is shorter than your current one. However, this may result in higher monthly payments. You can also refinance to a longer term, which would reduce your payments but increase the total interest you pay over time.