Refinancing is revising your loan to change its features – choosing a longer or shorter term or taking advantage of a better interest rate.

You could make your payments more affordable by choosing a longer term or pay off your loan sooner with larger payments over a shorter term. You could also take advantage of a better interest rate to save money.

On average, closing cost to refinance is between 2%-6% of the loan amount.

Refinancing itself doesn’t automatically hurt your credit score. However, there are two credit score factors that may be affected:

• If you already have multiple hard inquiries on your score, refinancing requires another. Multiple hard inquiries can temporarily decrease your credit score.
• When you refinance, you’re taking “old” debt and turning it into “new” debt. The length of your credit history (the average age of all your loans) does factor into your credit score. If your loan was your oldest debt, refinancing may change the average age and temporarily decrease your credit score.

While inquiries and age impact your credit score at first, refinancing can still improve your score over time. You could lower your debt amount and/or monthly payment, both of which reflect positively on your credit score.

Interest rate is based on a combination of market and personal factors – the current economy, your credit score and how you’ll use the property.

Your break-even point is how long it’ll take before the amount you save is more than you’ll pay in refinancing closing costs. If you stay in your home until at least that date, you’ll save money overall.

You’ll enter information about your original loan – the term, years you’ve already paid, and interest rate. Then you can enter new amounts for term, interest rate, closing costs, whether to finance closing costs, and how much you may cash out. We do provide default values for several of these options, which you can customize to view results for different loan scenarios.

Based on that information, the calculator will tell you how much your monthly payment could be lowered, how much interest you would save, and what your break-even point is.

Key factors:

• Term: How long you’ll be making monthly payments on your loan (measured in years).
• Interest rate: The amount you’ll be charged for the use of loan funds, as a percentage.
• Closing costs: Total expenses you’ll pay at the time you refinance – on average, this is between 2%-6% of the refinance loan amount.
• Financing closing costs: You may have the option to include closing costs in your new loan amount. This will cost more in the long run, as you pay interest on the closing costs, but is an option if you want to avoid upfront costs

This calculator lets you enter your desired term, interest rate and closing cost – and choose whether to finance closing costs and/or cash out.

Your results will reflect the factors you choose.

If you choose a shorter term, your monthly payment will typically increase, even if your interest rate is lower. You’ll be paying back more of the principal with each payment, since it’s divided over fewer months. This would be helpful if you’d like to pay off your loan quicker.

If you choose a longer term or to restart a 30-month term, your monthly payment will typically decrease. You may pay more in interest over that time, even if your interest rate decreases. This would be helpful if you’re likely to sell the home within a few years, or need the lowest payment possible for a period of time.