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Should I Prepay Mortgage or Refinance? Calculator

When does paying more equal paying less? When you prepay your mortgage.

You probably already know that sending more money than required each month (prepaying) saves you interest cost over the long haul. But did you know that prepaying can effectively replace the need to refinance... or can make your refinance even more valuable? Just a few extra dollars per month can bring the same savings as a refinance can, lowering the effective rate you pay without all the effort and hassle.

This new Prepayment::Refinance calculator (PreFiSM) will show you the effective interest rate you'll achieve when you prepay your loan.

Many homeowners refinance to save money; some do it to rebuild lost equity. However, if you have a small loan amount, relatively few years left on your loan or one where only a small break in rate is available, it may not be cost-effective for you to refinance. Or, you may be among many borrowers who can afford to pay more on their loans but cannot refinance due to today's stiffer underwriting standards.

So, if you can prepay your loan but can't refi, you can PreFi your mortgage and get virtually the same savings!

Also, if you have a specific interest rate in mind -- that you would like to prepay your mortgage as though it has a 2% interest rate, for example -- you'll want to also check out HSH's LowerRateSM Prepayment Calculator!

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Tell us about your loan
Current interest rate   %
Enter Loan Details (choose one)
Original loan amount
Original loan term
Initial loan payment date
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Current loan balance
Current monthly principal
and interest payment
Monthly prepayment amount
Prepayment start date
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Your results

As of , you have paid months with remaining.

You have already paid of a scheduled total of of interest on your loan.

Without Prepayment

You will pay off your loan in months (). Total amount of interest you'll pay:

With Prepayment

You will pay off your loan in months (). Total amount of interest you'll pay: . Total saving:

If you want to refinance and pay the same total interest on your new balance of , these are the minimum interest rates you need. If lower rates than these are available for a given term, a refinance might bring greater savings.

  • year term:
  • year term:
  • year term:
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Can you refinance and do better? Check rates here.
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Is an actual refinance better?

It may be worth considering a refinance, if you can qualify. Aside from savings, refinancing may bring improvements in cash flow, too, freeing up additional money (you could refinance, then PreFi, and lower your effective rate even more!)

Of course, refinancing costs money, either out of pocket or traded off into the interest rate. If you have the cash for closing costs but can't qualify for a refinance, use those funds to PreFi your mortgage by sending in a little extra each month, or even all at once. We estimate closing costs at about 2% of the loan amount, but if costs for your situation are higher, plug in in the dollar figure and we'll tell you the interest rate that your monthly or lump sum PreFi will buy you.

Refinancing typically costs % of the loan amount or $ for your loan balance Recalculate

If you broke this cost into the remaining payments ($ per month), you would produce total interest costs equivalent to refinancing to a year loan at a rate of %. Alternately, you could simply send the money in a lump-sum of $ which would produce a rate of % over years.

Remember: if you refinance to a new 30-year term, you are re-starting the "amortization clock" all over again. In your planning, you'll need to include what you've already spent in interest on your existing loan to determine if you end up with any actual savings.

After your year period is up, you would end with a balance of $, paying $ in interest.
Compared to a balance of and in interest without prepaying (saving in interest) and pay an equivalent year rate of %

If you're got a specific interest rate target in mind, try our LowerRate prepayment calculator, too!