Mortgage Refinance Calculator
Compare your current mortgage with a refinance to find the monthly saving, how many months to break even on closing costs, and the lifetime interest difference.
How to use this calculator
- 1Enter your current loan balance, interest rate, and years remaining.
- 2Enter the new rate and term you're being offered, and the closing costs.
- 3Read the monthly saving and the break-even point in months.
- 4Refinance if you'll stay in the home past the break-even; otherwise reconsider.
How it works
Refinance comparison
payment = P·i ÷ (1 − (1+i)⁻ⁿ), i = rate ÷ 12, n = months monthly saving = current payment − new payment break-even months = closing costs ÷ monthly saving lifetime saving = current total interest − new total interest
Refinancing replaces your existing mortgage with a new one, ideally at a lower rate. Whether it is worth it comes down to weighing the monthly saving against the upfront cost of getting the new loan. The new payment is the current balance amortised at the new rate over the new term; subtracting it from the current payment gives the monthly saving. Dividing the closing costs by that saving gives the break-even point — the number of months of lower payments needed to recover the cost of refinancing. If you will stay in the home beyond that point, refinancing puts you ahead; if you might move or refinance again before it, you would lose money. The lifetime interest figure adds a longer view, but must be read carefully when the terms differ in length.
Worked example
A $250,000 balance with 25 years left at 7% costs about $1,767 a month. Refinancing to a 30-year loan at 5.5% drops the payment to about $1,419 — a $348 monthly saving. With $4,000 in closing costs, the break-even is roughly 12 months, so staying beyond a year makes the refinance worthwhile.
Mortgage Refinance Calculator: the complete guide
The break-even point is the whole decision
Every refinance carries a cost — closing fees, appraisal, title work, points — typically running from 2% to 5% of the loan balance. Refinancing lowers your payment but only after you have paid that cost, so the question is never simply 'is the new rate lower?' but 'will I keep the loan long enough to recoup the fees?' The break-even point answers it directly: divide the total closing costs by the monthly saving, and the result is how many months you must stay to come out ahead.
This reframes refinancing as a bet on how long you will keep the mortgage. If the break-even is 12 months and you will own the home for years, it is an easy win. If it is 40 months and you might move or refinance again within three years, the fees could outweigh the savings and you would lose money. This is why people who move frequently, or who expect rates to keep falling, are cautious about refinancing even when a lower rate is available — the break-even math, not the rate alone, governs the outcome.
The trap of resetting the term
A refinance that lowers your monthly payment can still cost you more overall, and the usual culprit is the loan term. If you are 5 years into a 30-year mortgage and refinance into a fresh 30-year loan, you have quietly stretched your remaining 25-year obligation back out to 30. The lower payment is partly the lower rate and partly the longer schedule — and a longer schedule means more months of interest, which can exceed the savings from the rate cut.
The honest comparison holds the term constant. To see what the rate alone is worth, refinance into a term matching your remaining years, or shorter. Refinancing 25 remaining years into a new 25-year (or 20-year) loan captures the rate benefit without re-extending the debt, and often the payment still drops. Many borrowers use a rate cut as an opportunity to shorten the term instead, keeping a similar payment but paying the loan off years sooner. The calculator's lifetime-interest figure exposes this trade-off, but only if you read it alongside the term lengths.
When refinancing makes sense beyond the rate
Rate reduction is the classic reason to refinance, but not the only one. Some borrowers refinance to switch loan types — moving from an adjustable-rate mortgage to a fixed one to lock in certainty, or dropping mortgage insurance once they have enough equity. Others do a cash-out refinance, borrowing against built-up equity for renovations or to consolidate higher-interest debt, accepting a larger loan in exchange for cash today. Each of these changes the calculus beyond a simple payment comparison.
A common rule of thumb held that refinancing was worthwhile once rates dropped about a percentage point below your current one, but that is only a heuristic — the real test is always the break-even against how long you will stay. Also weigh softer factors: refinancing restarts the clock on interest-heavy early payments, temporarily slowing equity growth, and it requires qualifying again, with a credit check and paperwork. Run the numbers, find the break-even, and be honest about your time horizon before committing to the fees.
Frequently asked questions
How do I know if refinancing is worth it?
Find the break-even point: divide the closing costs by the monthly saving. If you'll keep the loan longer than that many months, refinancing saves money. If you might move or refinance again before then, the upfront fees outweigh the savings and it isn't worth it.
What is a refinance break-even point?
It is the number of months of lower payments needed to recover the closing costs of the refinance. With $4,000 in costs and a $348 monthly saving, break-even is about 12 months. Stay past it and you're ahead; leave before it and you've lost money on fees.
Can a lower payment cost me more in the long run?
Yes, if the new loan resets the term longer. Refinancing 25 remaining years into a fresh 30-year loan lowers the payment partly by stretching it out, adding months of interest. To judge the rate alone, match the new term to your remaining years or shorter.
How much does it cost to refinance?
Closing costs typically run 2% to 5% of the loan balance, covering the appraisal, title, origination, and other fees. On a $250,000 loan that is roughly $5,000 to $12,500. These costs are what the monthly savings must recover, which is why the break-even point matters so much.