Mortgage Refinance Calculator

Mortgage Refinance Decision Framework in 2026

With 30-year rates around 7.28%, refinancing makes financial sense primarily for borrowers who locked in at 7.5%–8%+ in late 2023 or 2024. The core math: any rate drop creates monthly savings; closing costs determine whether you recoup those savings before you sell or move.

Rate-and-Term vs Cash-Out Refinance

A rate-and-term refinance changes your interest rate or loan term without pulling equity. A cash-out refinance lets you borrow against your home equity — typically up to 80% LTV — and receive the difference as cash. Cash-out rates run 0.25%–0.375% higher. Use cash-out for home improvements that increase value, not for consumer spending that doesn’t build equity.

The Closing Cost Breakdown

Expect to pay 2%–5% of the loan in closing costs. On a $400,000 loan: $8,000–$20,000 covering origination fee (0.5%–1%), appraisal ($500–$800), title insurance ($1,000–$2,000), government recording fees ($200–$400), and prepaid items (property tax and insurance escrow). Some lenders offer “no-closing-cost” refinances by either rolling fees into the loan balance or raising the rate by 0.125%–0.25% — useful only for short expected hold periods.

See the exact break-even timeline with our Refinance Break-Even Calculator or model the full new payment with our Mortgage Calculator.