Mortgage Refinance Calculator
Compare your current mortgage with a new one to see how much the monthly payment changes, how many months it takes to recover the closing costs and whether you really save money over the life of the loan.
| Current loan | New loan | Difference |
|---|
Cumulative savings over time
Payments saved each month minus closing costs paid upfront. Above zero means the refinance has paid for itself so far.
Year-by-year comparison
| Year | Current: interest | New: interest | Current: balance | New: balance | Cumulative savings |
|---|
Estimates only, not financial advice. Payments are principal and interest; taxes, insurance and PMI are not included. Your lender's Loan Estimate shows the exact costs.
How to use the Mortgage Refinance Calculator
- Describe your current loan: enter the remaining balance and time left, or switch to Original loan and enter the amount, term and first payment month.
- Enter your current interest rate. The calculator works out your current principal and interest payment.
- Enter the new loan: rate, term, closing costs and any cash-out. Tick the box if the closing costs are rolled into the loan.
- Press Calculate to see the monthly payment change, the break-even month and the lifetime savings or loss.
- Check the chart to see when the refinance pays for itself and how the savings change once the old loan would have been paid off.
How the refinance numbers are worked out
Both loans use the standard mortgage payment formula M = P × r ÷ (1 − (1 + r)−n), where P is the balance, r is the annual rate ÷ 12 and n is the number of monthly payments left.
- Monthly savings = current payment − new payment.
- Break-even month = closing costs ÷ monthly savings, rounded up.
- Lifetime savings = all remaining payments on the current loan − (all payments on the new loan + closing costs paid upfront).
Worked example
You owe $250,000 at 7.25% with 25 years left, so your payment is $1,807.02. You can refinance at 5.75% with $5,000 closing costs paid upfront.
| Option | Monthly payment | Monthly savings | Break-even | Total interest | Lifetime savings |
|---|---|---|---|---|---|
| Keep current loan (25 yrs left) | $1,807.02 | – | – | $292,104 | – |
| New 30-year at 5.75% | $1,458.93 | $348.09 | 15 months | $275,217 | $11,887 |
| New 25-year at 5.75% | $1,572.77 | $234.25 | 22 months | $221,828 | $65,275 |
The 30-year loan has the lowest payment and the fastest break-even, but because it adds five years of payments it saves far less over its life than the 25-year loan. Matching the new term to the time left on your current loan shows the true benefit of the lower rate.
When refinancing usually makes sense
- You will stay past the break-even month. If you expect to move in two years and break-even is 30 months, the refinance loses money.
- The rate drop is meaningful. A common rule of thumb is at least 0.5 to 1 percentage point, but the break-even for your own costs matters more than any rule.
- You don't reset the clock too far. Choose a term close to what is left on your current loan, or plan to make extra payments.
- You can drop PMI or switch from an adjustable to a fixed rate. These benefits are not in the payment comparison but can be worth a lot.
The results are estimates only and are not financial advice.
Frequently asked questions
How is the refinance break-even point calculated?
Divide the total closing costs by the monthly payment savings. For example, $5,000 in closing costs with a payment that drops by $348 a month breaks even after about 14.4 months, so in the 15th month. If you sell or refinance again before then, the refinance loses money.
What is the interest-based break-even?
The simple break-even uses the lower monthly payment, but part of that drop can come from stretching the loan over more years rather than from a lower rate. The interest-based break-even counts only the interest you save each month and shows when that adds up to the closing costs. It is often a little later.
Why can a refinance lower my payment but cost more overall?
Starting a new 30-year loan on a balance that only had 20 or 25 years left spreads the debt over more months. Each payment is smaller, but you pay interest for longer, so the total can be higher. The lifetime savings figure shows this and turns red when you would lose money.
Should I roll closing costs into the loan?
Rolling the costs in means no cash is due at closing, but the loan is larger and you pay interest on the costs for the whole term. Paying them upfront usually saves money over time if you have the cash.
How much are refinance closing costs?
Closing costs commonly run about 2% to 5% of the loan amount and include lender fees, appraisal, title insurance and recording fees. Your lender's Loan Estimate lists the exact amounts.
Does this include taxes, insurance and PMI?
No. The payments shown are principal and interest only, because property tax and homeowners insurance usually stay the same after a refinance. If refinancing removes PMI, your real savings will be larger than shown.