Mortgage Refinance Calculator
See if refinancing your mortgage saves money. Calculates new payment, monthly savings, total interest savings, and break-even time.
What this calculates
Refinancing replaces your current mortgage with a new one — usually at a lower rate, sometimes a different term. The decision rests on three numbers: monthly savings, closing costs, and how long you'll stay in the home. This calculator shows all three plus the break-even month when accumulated savings finally cover the closing costs.
Formula & how it works
New monthly payment = standard mortgage formula with new rate and remaining balance. Monthly savings = old monthly − new monthly. Break-even months = closing_costs ÷ monthly_savings. Lifetime interest savings = (old_remaining_interest) − (new_total_interest) − closing_costs.
Worked example
$300K remaining at 7.5 %, 25 years left, current payment $2,217. Refinance to 5.75 % for new 30-year, $3,500 closing. New payment = $1,750. Monthly savings = $467. Break-even = 3500 ÷ 467 ≈ 7.5 months. Plan to stay 5+ years? Refinance wins by tens of thousands. Selling next year? Pay $3,500 to save ~$5,600 — still a winner here, but the math gets thin.
Frequently asked questions
What's a 'no-closing-cost' refinance?
The lender rolls the closing costs into the loan balance or accepts a slightly higher rate. There's no free lunch — you pay either way. It can be the right choice if you don't have cash for closing or plan to refi again soon.
Should I shorten my term when refinancing?
If you can afford the higher payment, yes — a 30-year refinanced into a 15-year often saves $100K+ in interest. If cash flow is tight, keep the long term but pay extra principal voluntarily.
How low does the new rate need to be?
Old rule of thumb: 1 % below current. Modern math: ignore the rule, just compute the break-even. A 0.5 % drop with low closing costs can pay off in a year; a 2 % drop with high closing might still take three years.
What about cash-out refinances?
Same math but with a larger loan. The 'cost' of the extra cash is the additional interest you'll pay over the loan's life. Useful for high-interest debt consolidation; questionable for discretionary spending.
Disclaimer: Informational only — not financial advice.