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Calculator Answers

Mortgage Refinance Calculator

Blake Boege
Written by Blake Boege · Founder, Calculator Answers

A mortgage refinance calculator is a financial tool that evaluates if refinancing a home loan will save money. By comparing the terms of an existing mortgage with the interest rate, term, and closing costs of a new loan, the calculator computes the new monthly payment, total interest savings, and the break-even period. The break-even period represents the number of months required for interest savings to offset refinancing fees. Homeowners use this tool to make informed decisions about refinancing.

Enter the current loan (balance, rate, remaining years) and the new loan (rate, term, closing costs). The calculator returns new vs current monthly payment, monthly savings, break-even months, and the lifetime interest comparison.

See also: Mortgage Recast Calculator, Mortgage Calculator, and Reverse Mortgage Calculator.

Quick Answer

Compare your current mortgage with a new loan to see if refinancing saves money. Enter your loan details and fees to find your monthly savings and break-even point.

Current loan

$

e.g. 280000

%

e.g. 7.25

yr

e.g. 25

New loan

%

e.g. 6.0

yr

e.g. 30

$

e.g. 4500

Assumes the new loan refinances the current balance only. Cash-out refis or rolling closing costs into the loan change the math.

Mortgage refinance

Monthly savings

$345.12

Break-even 14 months (~1.2 yr)

Current payment$2,023.86
New payment$1,678.74
Monthly difference−$345.12
Closing costs$4,500.00
Break-even14 months (~1.2 yr)
Total interest (current)$327,157.77
Total interest (new)$324,346.93
Lifetime savings (after closing)-$1,689.16

Estimate. Real refis include lender fees, points, escrow adjustments, and tax/insurance differences. Resetting to a longer term lowers monthly payment but can raise total interest. Plan the break-even time against how long you expect to stay in the home.

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Examples

$280k at 7.25% / 25 yr → 6% / 30 yr, $4,500 closing

saves ~$235/mo · break-even ~19 mo

$200k at 6.5% / 20 yr → 5.5% / 20 yr, $3,000 closing

saves ~$118/mo · break-even ~25 mo

$350k at 7% / 25 yr → 6% / 15 yr, $5,000 closing

may increase monthly but cut total interest

How it works

The calculator amortizes both the current and new loans on the same balance. The difference in monthly payment is the savings (or increase). Dividing closing costs by monthly savings gives the break-even point.

Monthly payment · P × r × (1+r)^n ÷ ((1+r)^n − 1)

Break-even · closing ÷ monthly savings

Assumes the new loan refinances the current balance only (no cash-out, closing not rolled in).

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Note. Estimate only. Real refis include lender-specific fees, escrow timing, possible PMI changes, and tax implications. Compare multiple Loan Estimates from different lenders before committing.

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Frequently asked questions

Most commonly when the new rate is meaningfully lower than the current rate, and you plan to stay in the home long enough to recoup the closing costs. A common rule of thumb: refinance saves money if you'll keep the loan beyond the break-even point. Cash-out refis and term changes have their own logic.

Closing costs divided by monthly savings. If a refi costs $4,500 and saves $150/month, the break-even is 30 months. If you'll keep the loan longer than that, the refi saves money on net. Less than that, it costs you.

Yes, indirectly. The new monthly payment is lower if you stretch to a longer term, but lifetime interest can rise. The calculator shows total interest under both loans so you can see the trade-off. Many homeowners refi from 30-year to 15-year to cut total interest.

Lender fees vary widely (origination, points, appraisal, title). Property tax and insurance escrow adjustments depend on local rules and timing. Rolling closing costs into the loan increases the new balance and changes payment math. This calculator assumes you pay closing costs out of pocket and refinance only the current balance.

Probably not. If you'll be in the home less than the break-even period, the refi costs more than it saves. Compare break-even months against your time-in-home estimate before committing.

Cash-out refis withdraw equity by increasing the loan balance. This calculator does not model cash-out: it only compares an equivalent-balance refinance to your current loan. For a cash-out, add the withdrawal amount to your new balance and recalculate.