Mortgage Refinance Calculator

See if refinancing your mortgage makes sense. Calculate your break-even point, monthly savings, and long-term interest savings.

Current Loan Balance ($)

Current Interest Rate (%)

New Interest Rate (%)

Remaining Term (Years)

Yrs

Closing Costs ($)

Monthly Savings

Current Monthly Payment$0

New Monthly Payment$0

Break-Even Point0 months

Total Interest Saved (over remaining term)$0

About Mortgage Refinance Calculator

Refinancing your mortgage can be a smart move, but only if the numbers work in your favor. The general rule of thumb is that refinancing makes sense if you can lower your rate by at least 1% and plan to stay in the home long enough to recoup the closing costs. But rules of thumb are just starting points — the real answer depends on your specific loan balance, remaining term, and how much those closing costs actually run.

This calculator does the heavy lifting by comparing your current payment against the proposed refinance payment, then calculating exactly how many months it will take to break even on closing costs. If you are planning to move before that break-even date, refinancing probably is not worth it. If you are staying put for the long haul, the savings can be substantial — especially in the current rate environment where even a 1% drop can save tens of thousands over the life of the loan.

How to Use This Calculator

Enter your current mortgage balance (e.g., $280,000), your current interest rate (6.5%), and your remaining loan term (25 years). Then enter the proposed new interest rate (5.25%), new loan term (30 years to reset the clock, or 15 years to pay faster), and your estimated closing costs ($6,000). Click 'Calculate' to see your new monthly payment, monthly savings, and the break-even point where the savings from the lower rate exceed the closing costs.

How to Interpret Your Results

Current mortgage: $280,000 at 6.5% with 25 years remaining = monthly payment of $1,890. Proposed refi: 5.25% for 30 years = monthly payment of $1,546, saving $344/month. With $6,000 closing costs, break-even is about 17 months. If you plan to stay in the home for 5+ years, refinancing saves approximately $14,640 over that period (after recouping closing costs). If you instead refi to a 15-year term at 4.75%, monthly payment jumps to $2,179, but total interest plummets and you own the home free and clear 10 years sooner.

When to Use This Calculator

Use this calculator whenever interest rates drop at least 0.75-1% below your current rate. It's essential during a rate-cut cycle when refinancing offers flood the market — you need to quickly evaluate whether they make sense. Also use it when considering a cash-out refinance to tap equity for home improvements or debt consolidation. If you're deciding between a 15-year and 30-year refinance, run both scenarios side by side. Revisit every 6-12 months to check if rates have dropped enough to refinance.

Frequently Asked Questions

When does it make sense to refinance my mortgage?

Refinancing makes most sense when (1) you can lower your rate by at least 0.75-1%, (2) you plan to stay in the home long enough to recoup closing costs (typically 2-5 years), and (3) your credit score is strong enough (720+) to qualify for the best rates. Even a 1% rate reduction on a $300,000 loan saves about $180/month or $2,160/year. If your break-even point is under 3 years and you're staying put, refinancing is usually a smart move.

What are typical closing costs for refinancing?

Typical refinance closing costs range from 2% to 6% of the loan amount. On a $300,000 loan, expect to pay $6,000 to $18,000 in fees including origination fees (0.5-1% of loan), appraisal ($400-700), title search and insurance ($700-1,500), credit report ($30-50), and recording fees ($100-300). Some lenders offer no-closing-cost refinancing where fees are rolled into the loan or exchanged for a slightly higher rate. Always get a Loan Estimate from 3-4 lenders to compare total closing costs before committing.

How do I calculate my break-even point on refinancing?

The break-even point equals your total closing costs divided by your monthly savings. If closing costs are $6,000 and you save $200 per month, your break-even is 30 months (2.5 years). If you plan to move before that date, refinancing does not make financial sense because you will not recoup the fees. Many experts recommend refinancing only if your break-even point is under 3-4 years. Use this calculator's built-in break-even output to see exactly where your crossover point falls.

Should I refinance to a shorter term?

Refinancing from a 30-year to a 15-year mortgage typically comes with a lower interest rate but a higher monthly payment. On a $300,000 loan, going from 30-year at 6.5% to 15-year at 5.5% might increase your monthly payment from $1,896 to $2,450, but you would own the home in half the time and save over $200,000 in total interest. This strategy works best if you have stable income, an emergency fund in place, and your retirement savings are on track. Use the calculator to compare total interest costs for both term options.

What is a cash-out refinance and when should I use it?

A cash-out refinance replaces your current mortgage with a larger loan, and you receive the difference in cash. If you owe $200,000 on a home worth $400,000, you could refinance for $300,000 and walk away with $100,000 in cash minus closing costs. Common uses include home renovations, debt consolidation, or funding a child's education. The interest rate on a cash-out refinance is typically 0.25-0.5% higher than a rate-and-term refinance. Use it cautiously — you are increasing your debt and extending your loan term, which means paying more interest over time.

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