Mortgage Refinance Calculator
Refinancing swaps your current mortgage for a new one, usually to get a lower rate, change the term or release cash. It only makes sense if the savings outlast the costs. This calculator takes your current balance, rate and time remaining, compares them with a new rate and term, and shows the new monthly payment, the monthly saving, the break-even month (when the saving has paid back the closing costs) and the total cost of each path. It deliberately shows the total cost too, because a lower payment on a longer term can still cost more overall.
How to use the mortgage refinance calculator
- Enter your current balance, current rate and the years left on the loan.
- Enter the new rate and term you have been quoted. Use the term in years (30, 20, 15…).
- Add the closing costs from your lender’s estimate, and choose whether you pay them upfront or roll them into the new loan.
- Read the break-even month first. If you expect to sell or refinance again before that month, the refinance probably will not pay off.
Formula
Monthly payment = L × i ÷ (1 − (1 + i)−n), where L is the loan amount, i is the monthly rate (annual rate ÷ 12) and n is the number of monthly payments.
Break-even (months) = closing costs ÷ monthly payment saving. If closing costs are rolled into the loan, L includes them. Total cost compares every remaining payment on your current loan with every payment on the new one plus any upfront closing costs.
Worked examples
Rate drop from 7% to 5.75%
You owe $300,000 at 7% with 28 years left (payment $2,038.83). Refinancing to a new 30-year loan at 5.75% with $6,000 paid upfront gives a payment of $1,750.72, a monthly change of $288.11 lower, and break-even after 21 months (1 year 9 months).
Shortening the term instead
Same $300,000 balance, but refinancing into a 15-year loan at 5.25% with $6,000 costs: the payment rises to $2,411.63, yet the net difference across the full terms is $244,951.52 saved. A higher payment can be the cheaper loan when it clears the debt years earlier.
When it does not make sense
If the new rate is not lower, there is no monthly saving, so the closing costs are never recovered — the calculator reports: “No monthly saving, so costs are never recouped”.
How to judge a refinance
The three questions that decide it
- How long until you break even? If it is longer than you expect to stay in the home, refinancing loses money.
- What happens to total interest? A new 30-year term on an old loan with 20 years left lowers your payment but can increase the total you pay. Compare the two total-cost lines.
- Can you use the saving productively? Some borrowers keep their old payment and send the saving as extra principal, which shortens the loan — test that on the mortgage payoff calculator.
Typical refinance costs
| Cost | Typical range |
|---|---|
| Lender origination / underwriting fees | 0.5–1% of the loan |
| Appraisal | $400–$800 (varies by area) |
| Title search and insurance | $500–$1,500 |
| Recording and other fees | $100–$500 |
Totals commonly land around 2–5% of the loan amount. These ranges are rough guides, not quotes — the Loan Estimate your lender must give you lists the real figures.
When refinancing is usually not worth it
- You plan to move within a couple of years.
- The rate improvement is small (often under about 0.5–0.75 percentage points once costs are considered).
- You would restart a long term when you are already far into the current loan.
Read the full guide: how to calculate your mortgage refinance break-even.
Practice problems
Try these yourself first, then check your answer. The answers come from the calculator above.
- You owe $250,000 at 6.8% with 25 years left. A new 25-year loan at 5.8% costs $5,000 to arrange (paid upfront). What is the monthly saving and break-even?
Show answer
New monthly payment (principal + interest): $1,580.33 · Monthly change: $154.85 lower · Break-even point: 33 months (2 years 9 months)
Common mistakes to avoid
- Looking only at the monthly payment. Restarting a 30-year clock on a loan with 20 years left usually lowers the payment but can raise total interest.
- Forgetting closing costs, or assuming “no-cost” refinances are free — the cost is usually built into a higher rate.
- Ignoring how long you will stay. A saving that takes 36 months to break even is a poor bet if you may move in two years.
- Comparing a payment that includes taxes and insurance with one that does not. This tool compares principal and interest only, so use the principal-and-interest line from both statements.
- Assuming the break-even is exact. Rates change, and your lender’s fees may differ from the estimate — recheck against your Loan Estimate.
Frequently asked questions
When is refinancing worth it?
When the monthly saving pays back your closing costs (the break-even point) well before you expect to sell or refinance again, and the new term does not add more total interest than you are comfortable with.
How is the refinance break-even point calculated?
Divide your closing costs by the monthly payment saving. $6,000 of costs and a $300 monthly saving breaks even at 20 months.
Should I roll closing costs into the new loan?
It keeps cash in your pocket today but you pay interest on the costs for the life of the loan. Use the “Roll them into the new loan” option here to compare the totals both ways.
Is a shorter term better when refinancing?
A shorter term usually carries a lower rate and much less total interest, but a higher monthly payment. Only choose it if the payment fits your budget comfortably.
Does this include property tax and insurance?
No. It compares principal and interest only, which is the part that changes in a refinance. Escrow items usually stay the same.
Is this financial advice?
No. It is an educational estimate. Your lender’s Loan Estimate and a qualified adviser are the sources for real quotes.
Sources and further reading
- IRS — Topic no. 505, Interest expense (includes home mortgage interest)
- Federal Reserve Board — interest-rate and monetary-policy information
By Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Last reviewed September 26, 2026. Found a mistake? Tell us; see our editorial policy.