Refinance Comparison Calculator

Follow these steps for an effective comparison:

Step 1: Gather standardized quotes

• Apply with 3-5 lenders within a 14-day window (counts as one credit inquiry)
• Request the same loan amount, term, and type from each
• Ask each for a Loan Estimate — it's a standardized form required by law

Step 2: Compare these key numbers

• Interest rate AND APR (APR includes fees)
• Total closing costs (Section A + B + C on Loan Estimate)
• Monthly principal and interest payment
• Total interest over the life of the loan
• Any prepayment penalties

Step 3: Calculate break-even for each

• Break-even = Total closing costs / Monthly savings vs. current loan
• The offer with the shorter break-even is better if you might move
• The offer with the lowest total cost is better if you're staying long-term

Step 4: Negotiate

• Show competing offers to each lender — they can often match or beat
• Ask about fee waivers, lender credits, or rate matching
• Origination fees and processing fees are always negotiable

Interest rate is just one piece of the cost puzzle:

Interest Rate:

• The annual cost of borrowing the principal balance
• Determines your monthly principal and interest payment
• Does NOT include any fees or charges
• Example: 6.25% on $300K = $1,847/month (P&I)

APR (Annual Percentage Rate):

• Includes the interest rate PLUS fees spread over the loan term
• Required by law (Truth in Lending Act) for all loan disclosures
• Includes: origination fees, discount points, mortgage insurance, some closing costs
• Does NOT include: appraisal, title insurance, taxes, homeowner's insurance
• Example: 6.25% rate with $6,000 in fees = ~6.42% APR on a 30-year loan

Why APR matters for comparison:

• Lender A: 6.25% rate, $8,000 fees = 6.50% APR
• Lender B: 6.50% rate, $3,000 fees = 6.59% APR
• Despite a lower rate, Lender A is more expensive overall
• APR levels the playing field between different fee structures

It depends entirely on how long you'll keep the loan:

Choose lowest closing costs if:

• You might move or refinance again within 3-5 years
• You want to minimize upfront cash outlay
• You're not sure about your long-term plans
• The rate difference is small (under 0.25%)

Choose lowest rate if:

• You plan to stay 7+ years and won't refinance again
• The rate savings is significant (0.5%+ lower)
• You can comfortably afford the upfront costs
• You've found your "forever home"

Example comparison:

• Offer A: 6.25% rate, $4,000 closing costs, payment $1,847
• Offer B: 5.99% rate, $9,000 closing costs, payment $1,796
• Monthly savings of Offer B: $51/month
• Extra cost of Offer B: $5,000
• Break-even: 98 months (8.2 years)
• If you stay 10 years, Offer B saves $1,120 total. If you move in 5 years, Offer A saves $1,940

Get at least 3-5 quotes for the best deal:

Research shows shopping saves money:

• Borrowers who get 5+ quotes save an average of $3,000-$5,000 over the life of the loan
• Rate quotes can vary by 0.5% or more between lenders on the same day
• Closing cost differences of $2,000-4,000 are common

Where to get quotes:

• Your current lender (may offer retention deals or waive some fees)
• Big banks (Chase, Wells Fargo, Bank of America)
• Credit unions (often lower fees and competitive rates)
• Online lenders (Better, LoanDepot, Rocket Mortgage — often fastest)
• Mortgage brokers (shop multiple wholesale lenders for you)

Credit score protection:

• All mortgage inquiries within a 14-45 day window count as ONE inquiry
• FICO uses a 45-day window; VantageScore uses 14 days
• Apply with all lenders within this window to protect your score
• One inquiry typically drops your score by only 3-5 points temporarily

Points are prepaid interest that lower your rate:

How points work:

• 1 point = 1% of the loan amount
• Each point typically lowers your rate by 0.25%
• On a $300,000 loan: 1 point = $3,000 upfront
• At 0.25% rate reduction: saves ~$50/month
• Break-even: $3,000 / $50 = 60 months (5 years)

Points are worth it if:

• You'll keep the loan longer than the break-even period
• You have the cash available (don't drain emergency fund)
• The points are tax-deductible for your situation
• You're getting a purchase or rate-and-term refi (points deductible in year paid)

Points are NOT worth it if:

• You might sell, refinance, or move within 5 years
• You need the cash for other priorities (debt payoff, investing)
• The lender is charging points AND high fees
• Rates are likely to drop further (you'd refinance again)

Negative points (lender credits):

• You can accept a higher rate in exchange for lender credits that cover closing costs
• -1 point on $300K = $3,000 credit toward fees, rate increases ~0.25%
• Great option if staying short-term or want to minimize cash at closing

A no-closing-cost refi trades upfront fees for a higher rate:

How it works:

• Lender waives or credits closing costs ($4,000-8,000 typically)
• In exchange, your rate is 0.125-0.5% higher
• You pay nothing (or very little) at closing
• The higher rate costs you more monthly for the life of the loan

Example comparison on $300K loan:

• Standard refi: 6.00% rate, $6,000 closing costs, $1,799/month
• No-cost refi: 6.375% rate, $0 closing costs, $1,872/month
• Extra monthly cost: $73/month
• If you stay 30 years: no-cost costs $26,280 more in interest
• If you move in 3 years: no-cost saves $6,000 - $2,628 = $3,372

Choose no-cost refi if:

• You plan to move or refinance again within 3-5 years
• Rates might drop further and you'd want to refinance again
• You don't have cash for closing costs and don't want to increase loan balance
• The rate difference is small (under 0.25%)

Choose standard refi if:

• You're staying in the home 7+ years
• You can afford the closing costs
• You want the lowest possible long-term cost
• You're doing a "final" refinance at historically low rates