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Use these interactive mortgage tools and calculators to run the numbers on different scenarios and find the best mortgage for you.

Mortgage Tools and Calculators

Want to know how much you could save by refinancing? Use Better Mortgage’s refi calculator to compare the cost of your current mortgage and a new one. Just enter your current loan details, then choose a new rate and loan type from the [Better Mortgage rate tool](https://better.com/mortgage-rates/refinance) to get started. If you like what you see, [get pre-approved in just 3 minutes](https://better.com/start-refinance) without affecting your credit score. 

Note: The refinance calculator is for illustrative purposes only.

<p><br></p>

<iframe src="https://widgets.better.com/refinance-calculator" width="100%" height="2200"></iframe>


<p><br></p>

## How the mortgage refinance calculator works

Refinancing can save you money over the life of your loan, and locking in a lower rate is just the first step. 

1. __The calculator assumes you will invest your savings.__ To get a full picture of your maximum potential savings in any refinance scenario, this calculator assumes that you’ll be investing the money you’ve saved—building wealth by putting that extra money toward stocks and bonds. The calculator applies a conservative estimate of a 3.5% return on your investment, but you can decrease or increase this amount in the “Advanced Settings” section of the calculator. (If you keep most of your savings in a bank account, decrease this number to 0%. If you invest most of your savings in the stock market, increase it to 6%.) 

2. __The calculator assumes you will claim tax deductions.__ Refinancing can also qualify you for tax deductions—for example, interest payments made on the refinanced loan can be deducted from your overall taxable income. Because of this, the calculator figures that you’ll lower your overall marginal tax rate by applying for standard deductions after you refinance. The calculator will default to a future and marginal tax rate of 28%, but this figure can be adjusted under the “Advanced Settings” section based on your income bracket and which deductions you expect to claim. Note that the tax rules for [cash-out refinances](https://better.com/content/cash-out-refinancing-gives-you-options) are slightly different, and might limit the deductions you qualify for. If you don’t already know how your tax deductions are filed, speak to your tax professional. They will understand your unique financial circumstances and, as experts in the tax code, they can give tailored advice for your situation.

<br>

 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/preapproval/refinance">Apply now</a>  
 </div>

<br>

## When to refinance a mortgage

Most people choose to refinance because it allows them to reduce the monthly cost of their mortgage. (Remember that a home loan’s monthly cost is determined by more than just principal and interest—use our [mortgage calculator](https://better.com/mortgage-calculator) to understand the other costs that can drive up the amount you pay for a home.) But the math of refinancing is a bit more complicated than just pouncing on a lower rate. Maximizing the value of your refinance comes down to timing. 

Because out-of-pocket closing costs will set you back at the start of your new loan term, you need to be sure you’ll keep the refinanced mortgage long enough to recoup that initial upfront loss and then benefit from the savings long-term. You probably wouldn’t want to refinance your loan and then sell your home a year later (before you’ve had a chance to make back the initial cost of refinancing). The cost of refinancing averages between 2%—5% of your loan amount, so be sure to add that expense in the “Cost of refinance” section of the refi calculator. 

<br>

 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/preapproval/refinance">Apply now</a>  
 </div>

<br>

## Is it worth it to refinance? 

When you refinance your mortgage, you're exchanging the current terms of your mortgage for new ones. Most people think refinancing is all about locking in a lower interest rate, but there are plenty of other worthwhile reasons to refinance.

### Consider refinancing to change your mortgage type

Switching from an adjustable-rate to a fixed-rate mortgage (or vice versa) can provide serious financial advantages depending on how long you plan to stay in your home. With an adjustable-rate mortgage, or ARM, you typically pay a set amount of interest for the first few years of the loan. After that, your interest rate will be determined by the market—meaning your costs could spike if market factors aren’t favorable. If you’re a homeowner who initially got an ARM to purchase your home, refinancing to a fixed-rate mortgage could provide more consistent payment stability if you plan on staying there long-term. On the flip side, converting a fixed-rate loan to an ARM might make sense for homeowners who plan to sell their homes in the near future. ARMs usually offer lower monthly payments than fixed-rate mortgages, so refinancing when rates are dropping can deliver double savings.

[Check today's mortgage rates.](https://better.com/mortgage-rates/refinance)

### You can also refinance to change your mortgage term length

Refinancing to a shorter-term mortgage usually means that the cost of your monthly mortgage payment will be higher. But wait—isn’t the whole point of refinancing to save money? Paying off a mortgage in a shorter time period means you pay more each month but less in total. This is because you’ll make fewer interest payments over the life of your loan, which can add up to thousands of dollars in savings. If you can afford that higher monthly amount, the potential savings in interest payments over time might be worth refinancing. 

### Or refinance to change your mortgage interest rate

This is the most popular reason to refinance, but you don’t necessarily have to wait for the market to shift to lock in a lower rate. If you can’t find an interest rate competitive enough to make the process worthwhile, [paying for discount points](https://better.com/content/guide-to-refinance-points) when you refinance might help you reach your financial goals. Again, it depends on how much cash you can put toward the upfront cost of refinancing, and whether you’ll be in your home long enough to make back that money. Closing costs for refinancing are one-time, out-of-pocket expenses that can deplete your cash flow. If it’s too difficult to absorb that cost, it may not make sense to refinance your mortgage. Saving money in the long run isn’t always worthwhile if you’re jeopardizing your current financial well-being. 

## Apply for your refi in just 3 minutes

To see if refinancing is right for you, [get pre-approved](https://better.com/start-refinance) in just 3 minutes without affecting your credit score. Use Better’s 24/7 rate lock option to guarantee the best possible price. 

<br>

 <div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/preapproval/refinance">Apply now</a>  
 </div>

<br>

<div class="footnotes"><ol><li class="footnote" id="fn:1"><p>Mortgage refinance calculator for illustrative purposes only. Accuracy not guaranteed. <a href="#fnref:1" title="return to article">↩</a></p></li>
<li class="footnote" id="fn:2"><p>Agarwal, Ben-David, and Yao (2016), forthcoming in the Journal of Financial Economics  <a href="#fnref:2" title="return to article">↩</a></p></li></ol></div>


Try this refinance calculator to understand how much you could save if you refinance your mortgage.

Free Refinance Calculator

Blog post image for Refinance calculator - Should you refinance your mortgage?

Refinance calculator - Should you refinance your mortgage?

<p><em>In this post, we’ll explain what “amortization” means and provide an amortization calculator to show the mortgage payoff schedule for any fixed-rate mortgage.</em></p>

<hr />

<p>"Amortization” is the process by which a loan’s balance is paid down over time. In the case of a mortgage, there is one payment for each month of the loan term (say 30 years). Each time the borrower makes a payment, the loan balance is reduced, thereby amortizing the loan. After the full term, the loan has been completely amortized and the balance is $0.</p>

<p>To see how this works, try this interactive amortization calculator. We also provide a basic example and explain how the amortization table is calculated below. <br />
<br>  </p>

<h2 id="amortizationcalculator">Amortization calculator  </h2>

<p>Select loan term, loan amount, and interest rate to view the amortization table. You can view the graph by monthly payment (broken down into principal and interest) or total loan balance. The table provides the full amortization schedule for the selected year.<sup id="fnref:1"><a href="#fn:1" rel="footnote">1</a></sup></p>

<p>Click anywhere on the amortization schedule calculator or select a different year to see the detailed payment amounts for that time in the loan term.</p>

<div id="widget-element"></div>  

<script src="https://media.better.com/widgets/amortization-schedule.js"></script>

<div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/preapproval/nxt-purchase">New application</a>  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/redirect">Continue my application</a>  
 </div>

<h2 id="abasicexampleofamortization">A basic example of amortization  </h2>

<p>Let’s say you take out a 30-year fixed-rate mortgage in the amount of $500,000, with a 3.500% interest rate. The amortization schedule calls for you to make 360 monthly payments of exactly $2,245.22. </p>

<p>Each of those monthly mortgage payments comprises principal and interest. While the total payment amount never changes over the 30-year term, the amount of the payment that goes to principal goes up with each subsequent payment, and the amount that goes to interest goes down.</p>

<p>The reason for this is the amortization of the loan balance. At the start of the term, the loan balance is $500,000. The amount of interest you owe in the first month is based on 3.500% (annually) of that balance. Your first monthly payment breaks down to $786.89 principal and $1,458.33 interest. </p>

<p>Once you make this payment, your loan balance goes down to $499,213.11. Since you pay interest only on the balance, you owe less interest. Therefore, in your second payment, $789.19 goes to principal and $1,456.04 goes to interest.</p>

<p>Each month, you chip away at the loan balance, with more money going to principal and less going to interest than the previous month. After 359 payments, $2,238.69 of your final payment will go to principal, and only $6.53 to interest, and your loan is fully amortized. </p>

<h2 id="amortizationscheduleformula">Amortization schedule formula  </h2>

<p>The amortization schedule for a fixed interest loan provides a month-by-month breakdown of:</p>

<ul>
<li>The monthly payment amount (stays the same each month)</li>
<li>The amount that goes to principal (goes up each month)</li>
<li>The amount that goes to interest (goes down each month)</li>
<li>The loan balance (goes down each month)</li>
</ul>

<p>In case you’re interested in how this is calculated, here is the formula:</p>

<div class="formula-div">
<img src="https://media.better.com/better-com/1691097210839/equation.svg" />
</div>

<p>Where:</p>

<ul>
<li>A = total monthly payment</li>
<li>B = current loan balance</li>
<li class="formula-rate-li">r = <em>monthly</em> interest rate – e.g., if your rate is 3.5% then: 
<img src="https://media.better.com/better-com/1691097210839/rate_equation.svg" />
</li>
<li>n = number of remaining months</li>
</ul>

<p>Since the numbers will not end up being even cents, rounding adds some more complexity. Every rate quote will include your monthly payment amount, and provide the info you need to calculate your amortization.</p>

<div style="text-align: center">  
<div style="text-align: center">  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/preapproval/nxt-purchase">New application</a>  
 <a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/redirect">Continue my application</a>  
 </div>
 </div>

<br> 
<div class="footnotes"><ol><li class="footnote" id="fn:1"><p>The amortization calculator is provided for demonstrative purposes only. <a href="#fnref:1" title="return to article">↩</a></p></li></ol></div>

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Try this interactive amortization calculator to find the amortization schedule for any fixed-rate mortgage.

Free, Interactive Mortgage Amortization Calculator and Table

Blog post image for Free mortgage amortization calculator and table

Free mortgage amortization calculator and table

<p><em>If you refinance or sell your home in the average time frame, taking lender credits to offset your closing costs (a.k.a. a no-cost mortgage) will save you money in comparison to paying points.</em></p>

<hr />

<iframe src="https://player.vimeo.com/video/231571022" width="100%" height="360" frameborder="0" webkitallowfullscreen mozallowfullscreen allowfullscreen></iframe>

<script src="https://fast.wistia.net/assets/external/E-v1.js" async></script>  

<p><br> <br />
“Taking credits” refers to the practice of accepting a higher interest rate (and therefore higher monthly payments) in exchange for cash to offset your closing costs. If you take enough credits to offset all closing costs, this results in a “no-cost mortgage.” </p>

<p>The flip side of taking credits is “paying points,” which means paying a percentage of your mortgage balance upfront in exchange for a lower interest rate and lower monthly payments. </p>

<p>The typical cost of changing your rate by 0.125% is 0.625% of your loan amount. So on a $400,000 loan, if you took a rate increase of 0.125%, you would receive $2,500 in credits. If you reduced the rate by 0.125%, you would pay $2,500 in points.</p>

<blockquote>
  <p>There are many factors that determine whether paying points or taking credits is right for you. However, perhaps the most important one is how long you keep your mortgage without fully repaying it by selling your home or refinancing.</p>
</blockquote>

<p>By taking credits, you will save money early on by reducing your closing costs. But there will be a time in the future when you will lose money (compared to paying points) by paying the higher interest rate. The gamble is whether you get out of your mortgage before the time when you break even.</p>

<h4 id="figureifyoutakecreditsyouwillsavemoneyearlyinyourmortgagetermbyoffsettingclosingcosts">Figure: If you take credits, you will save money early in your mortgage term by offsetting closing costs.</h4>

[![ Graph: Years on X Axis and Total Savings If You Pay Points on Y Axis](https://media.better.com/content/prod/2016/09/concept-take-credits.png)](https://better.com/start) <br />
<em><p style="font-size:1.4rem;">This graph illustrates the concept of taking credits.</p></em>

<p>By paying points, you will lose money at the start by paying the closing costs. But there will be a time in the future when you break even and start to save money by paying the lower interest rate. If you leave your mortgage before that time, you lose money. The gamble is whether you will stay in your mortgage long enough to reach the time when you break even. </p>

<h4 id="figureifyoupaypointsupfrontyouwilllosemoneyearlyinyourmortgageterm">Figure: If you pay points upfront, you will lose money early in your mortgage term.</h4>

[![ Graph. Years on X Axis and Total Savings If You Pay Points on Y Axis](https://media.better.com/content/prod/2016/09/concept-pay-points.png)](https://better.com/start) <br />
<em><p style="font-size:1.4rem;">This graph illustrates the concept of paying points.</p></em>

<h2 id="payingpointswasthewrongdecisionformostborrowers">Paying points was the wrong decision for most borrowers</h2>

<p>Historical data tells us that for most borrowers in the last 25 years, paying points has been a bad decision. Recent research using data from 1990-2015 found that on average, borrowers have kept their mortgages only five years (<em>Agarwal, Ben-David, and Yao (2016), Journal of Financial Economics</em>). </p>

<p>Historical data from Freddie Mac is consistent, showing the majority of borrowers have refinanced, sold, or otherwise closed their mortgage within six years.</p>

<h4 id="figurethemajorityofloansinthefreddiemacdatasethavebeenactivelessthansixyears">Figure: the majority of loans in the Freddie Mac dataset have been active less than six years</h4>

[![ Graph. Number of Years Since Origination on X Axis and Loans Still Active (%) on Y Axis](https://media.better.com/content/prod/2016/09/loans-active.png)](https://better.com/start) <br />
<em><p style="font-size:1.4rem;">Fraction of loans still active out of the cohort originated in any given year. For instance: out of the loans originated in 2008, less than 40% were still active four years later. The other 60+% had refinanced, foreclosed, or sold.</p></em>

<blockquote>
  <p>What this means is that those who paid points usually left their mortgages before the break-even line, and therefore lost money. Had they taken credits (or a no-cost mortgage) instead, they would have saved money.</p>
</blockquote>

<p>While you might think this finding is due to the time-period studied and interest rate trends over that time, the authors of the research also ran an ex-ante simulation. Given the break-even nature of paying points, those who paid points should have been less mobile on average (e.g., slower terminations for non-rate-based reasons) than those who did not pay points. However, the research concluded that points-payers did not keep their mortgages a statistically different amount of time than non-points-payers.  </p>

<h2 id="sowhenshouldyoupayforalowerrate">So, when should you pay for a lower rate?</h2>

<p>There are a few scenarios where it does make sense to pay out of pocket for points:</p>

<ul>
<li>You think it’s really unlikely that you will move or refinance for a very long time.</li>
<li>Your projected income is going down in the future, meaning you would not be able to qualify for a similar mortgage.</li>
<li>Your tax rate this year is much higher than what you expect in future years. You want to deduct as much as possible when your tax rate is high, and points are deductible against income in the year you get the mortgage.</li>
</ul>

[![ Got More Questions? Our Free Guide Has the Answers. Sign Up to Download](https://media.better.com/content/prod/2017/10/FTHB_adforblogB-1.png)](https://better.com/content/the-guide)

<h2 id="runyourownscenario">Run your own scenario</h2>

<p>In the end, whether to pay points or take credits is a complex question. Things you probably rarely consider (like your future marginal tax rate) affect whether you should pay points or take credits in your particular situation. To make it a bit easier, we’ve provided a calculator that will help you explore different scenarios and make your own determination.<sup id="fnref:1"><a href="#fn:1" rel="footnote">1</a></sup> </p>

<p>The projected break-even time will be your guide. If you are considering paying points, you should do so only if you have a high level of certainty that you’ll stay in the mortgage longer than that. You are confident you won’t move, sell your house, pre-pay your mortgage, refinance for a better rate, take cash out for renovations, etc.</p>

<p>If you think any of the above scenarios might happen sooner than that, taking credits is likely a better option.</p>

<div id="widget-element"></div>  

<script src="https://media.better.com/widgets/pay-points.js"></script>

<h2 id="getaratequote">Get a rate quote</h2>

<p>You can <a href="https://better.com/start">get a personalized rate quote</a> from Better Mortgage in minutes, without affecting your credit score. </p>

[![ A Better Mortgage Starts with Better Information. Get a Better Mortgage](https://media.better.com/content/prod/2017/05/blog_nocostmortg_CTA@2x-1.png)](https://better.com/start)

<p>Every rate quote will provide options for paying points and taking credits, including a no-cost option. Try it and see which option is best for you.</p>

<div class="footnotes"><ol><li class="footnote" id="fn:1"><p>The calculator is provided for demonstrative purposes only. <a href="#fnref:1" title="return to article">↩</a></p></li></ol></div>

Historical data tells us that for most borrowers in the last 25 years, paying points has been a bad decision.

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Refinance calculator - Should you refinance your mortgage?

Free mortgage amortization calculator and table

Why a no-cost mortgage has historically been the best choice for most borrowers: try our interactive tool