Mortgage Refinance Calculator
See whether refinancing your mortgage is worth it. Enter your current loan and a new rate, and get your monthly savings, the month you break even on closing costs, and the total interest you would save.
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Refinance Savings
A refinance replaces your current mortgage with a new one. This tool computes the monthly payment on both your current balance at your current rate and remaining term, and the same balance at a new rate and term, then shows the monthly saving and the break-even month = closing costs ÷ monthly saving. Example: $250,000 at 7% with 25 years left, refinanced to 5.5% over 30 years with $4,000 costs, saves about $347 a month and breaks even in roughly 12 months.
Estimates only. The current payment is derived from your remaining balance, rate, and term. Actual refinance offers depend on your credit, equity, and lender fees, and "lifetime savings" is net of the closing costs you enter but does not account for taxes or the time value of money.
How a Mortgage Refinance Calculator Works
Refinancing means replacing your existing mortgage with a new one — you take out a fresh loan, use it to pay off the old balance, and then repay the new loan on its own rate and term. People refinance for a few reasons: to lower the interest rate, to reduce the monthly payment, to shorten the term and clear the debt faster, or to switch from an adjustable rate to a fixed one. A refinance calculator turns those choices into three numbers that actually matter: how much you save each month, how long it takes to earn back the cost of refinancing, and how much interest you save — or lose — over the life of the loan.
This calculator works by pricing two loans on the same outstanding balance. Your current payment is the level monthly instalment implied by your balance, your current rate, and the number of years you have left. Because the outstanding balance of any mortgage is exactly the present value of its remaining payments, deriving the payment this way reproduces what you are really paying today. The new payment is the instalment on that same balance at the new rate over the new term. The difference between the two is your monthly saving.
The break-even point
Refinancing is not free. Closing costs — origination and application fees, appraisal, title work, and recording — typically run about 2% to 5% of the loan amount. The single most important question in any refinance decision is therefore: how long until my monthly savings pay back those costs? That is the break-even point, and the maths is simple:
Break-even months = closing costs ÷ monthly savings
If a refinance costs $4,000 and saves you $347 a month, you break even in about twelve months. Stay in the home well beyond that and the refinance is money in your pocket; sell or move before it and you have lost money on the deal. This is why the break-even month, not the headline rate, is the figure to anchor your decision on.
The longer-term trap
A lower rate almost always lowers the monthly payment, but that does not guarantee you pay less interest overall. If you have 25 years left and refinance into a fresh 30-year loan, you have reset the clock — you will make payments for five more years than you would have. On a large balance those extra years of interest can wipe out much of the benefit of the lower rate, even though the monthly payment looks attractive. That is why this calculator reports lifetime savings: it compares the total remaining cost of your current loan against the full cost of the new loan, closing costs included, so a longer term that quietly erases your savings shows up honestly. If you want the rate cut without restarting the term, choose a new term close to your remaining years, or keep making your old, higher payment on the new loan.
When refinancing is worth it
A widely used rule of thumb says a rate drop of roughly 0.75% to 1% makes refinancing worth a serious look, but rules of thumb are no substitute for your own numbers. The same one-point drop saves far more on a $400,000 balance than on a $80,000 one, and it only helps if you stay past the break-even month. Three questions settle most decisions: How much lower is the new rate? What will the closing costs be? And how long do you realistically plan to keep this home? Feed honest answers into the calculator and the break-even and lifetime-savings figures will tell you whether the deal makes sense.
Rate-and-term versus cash-out
The refinance modelled here is a rate-and-term refinance — you keep the same balance and simply change the rate and the term. A cash-out refinance is different: you borrow more than you owe and take the difference in cash, usually to fund home improvements or consolidate other debt. Cash-out increases your balance and your payment, and often carries a slightly higher rate, so it is a borrowing decision as much as a savings one. If you are considering cash-out, add the extra amount to the balance to see the new payment, but remember the goal there is access to cash, not interest savings.
Using your results
Start with your real outstanding balance and the years remaining, then enter the best rate you have actually been quoted and your expected closing costs. Read the break-even month first: if it falls comfortably within how long you plan to stay, the refinance is likely worthwhile. Then check lifetime savings to make sure a longer term is not costing you in the long run. Download the new loan's amortization schedule as a CSV if you want to see exactly how the balance falls, and compare a couple of scenarios — a 30-year and a matching-term option — before you commit. Treat these figures as a well-grounded estimate, and confirm the final rate, fees, and terms with your lender before signing.
Refinance Calculator — Frequently Asked Questions
Refinancing replaces your existing mortgage with a new loan, usually to get a lower interest rate, change the loan term, or switch loan type. You pay off the old balance with the new loan and then make payments on the new terms. Most people refinance to lower their monthly payment or to reduce the total interest they pay over the life of the loan.
The break-even point is the number of months it takes for your monthly savings to recoup the closing costs of the refinance. Divide the total closing costs by the monthly saving: for example, $4,000 in costs against a $347 monthly saving breaks even in about 12 months. If you plan to keep the home well past the break-even month, refinancing usually pays off; if you might sell before then, it may not.
It can. If you refinance a loan with 25 years left into a fresh 30-year mortgage, you restart the clock, which lowers the monthly payment but can increase the total interest you pay even at a lower rate. To avoid resetting the term, refinance into a loan whose term matches your remaining years, or make extra payments on the new loan. This calculator shows lifetime savings net of that effect.
A commonly cited rule of thumb is that a rate drop of about 0.75% to 1% is enough to make refinancing worthwhile, but the real test is your break-even point and how long you will stay in the home. A 1% drop on a large balance can save a lot; on a small remaining balance the same drop may not cover the closing costs before you move. Always compare the break-even month against your plans.
Refinancing typically carries closing costs of roughly 2% to 5% of the loan amount, covering things like the application and origination fee, appraisal, title search and insurance, and recording fees. Some lenders offer a "no-closing-cost" refinance, but they usually recover it through a higher rate or by rolling the costs into the balance. Enter your expected closing costs in the calculator so the break-even and lifetime savings reflect them.