Mortgage Refinance Calculator
See whether a lower rate actually pays after closing costs, timeline, and remaining loan term.
Current loan vs new loan
Use your current mortgage balance and the new loan offer. Closing costs can be paid upfront or rolled into the loan.
Refinance signalRun the numbers
Compare monthly savings with closing-cost break-even.
Payment comparison
What this meansCheck your break-even
A refinance works best when you stay past the break-even month and the new term does not restart too much interest.
Also compare APR, points, escrow changes, and whether costs are paid upfront or added to the loan.
How a mortgage refinance works
A refinance replaces your current mortgage with a new loan. The main reason people refinance is to lower the interest rate, lower the monthly payment, shorten the term, remove mortgage insurance, or change from an adjustable rate to a fixed rate.
The key is break-even. If closing costs are $6,500 and the refinance saves $250 per month, the simple break-even is 26 months. If you sell or refinance again before then, the lower payment may not have had enough time to repay the costs.
Example: a refinance that pays back
Imagine your current mortgage payment is $2,725 and a new offer would bring it to $2,425, with $6,000 in closing costs. The monthly savings is $300, so the simple break-even is about 20 months. If you expect to stay in the home for seven years, that gives the refinance time to recover the costs and create real cash-flow savings.
The same refinance may look weaker if you expect to move in 12 months. In that case, you might save $3,600 in payments but spend $6,000 to get there. The lower monthly payment feels good, but the timeline does not give it enough room to work.
Monthly savings can be misleading
A new 30-year loan can lower the payment partly because it stretches the debt over more years. That can be helpful for cash flow, but it may increase total interest if you restart the clock. Compare both monthly payment and long-term interest.
Example: lower payment, higher total interest
Suppose you have 22 years left on your mortgage and refinance into a fresh 30-year term. Even with a lower rate, the new loan can add eight extra years of payments. That may be worth it if you need breathing room in the monthly budget, but it is different from a pure interest-saving refinance.
One way to test this is to compare the new payment with a shorter term, such as 20 or 15 years. A shorter refinance may not reduce the monthly payment as much, but it can protect more long-term interest savings.
When refinancing can make sense
- Your break-even month is well before your likely move date.
- The new loan meaningfully lowers the rate after fees and points.
- You can remove mortgage insurance or improve loan terms.
- You want to shorten the loan and can handle the payment.
- You are replacing a risky adjustable payment with a predictable fixed payment.
When to be careful
Be cautious when the refinance only works because the term gets much longer, when closing costs are high, or when you are not sure how long you will keep the home. Rolling costs into the loan can be convenient, but it means you may pay interest on those costs for years.
What to check before refinancing
- APR, points, lender fees, appraisal costs, and title costs.
- Whether closing costs are paid upfront or rolled into the loan.
- How long you realistically expect to stay in the home.
- Whether the refinance removes PMI or changes escrow.
- Whether a shorter term could save interest without straining cash flow.
Questions to ask the lender
- What is the total cash to close, not just the monthly payment?
- Are there points, credits, or prepaid escrow items included in the quote?
- What is the APR compared with the note rate?
- How much principal will be owed after five years under the new loan?
- Is there any prepayment penalty or servicing change to understand?
Source notes
This calculator uses standard fixed-rate mortgage amortization. It does not include taxes, insurance, PMI, ARM resets, state-specific fees, deductibility, or lender-specific APR disclosures. Use the Loan Estimate from your lender before deciding.