Refinance Calculator
Compare refinancing against your current mortgage.
Details
Current loan
New loan
New monthly payment
$1,498.88
vs $1,752 now, saves $253/mo
Monthly change
-$253
Break-even
20 mo
Lifetime interest saved
$28,138
Net savings (after costs)
$23,138
Break-even point
This compares your current mortgage against a new one, showing the change in payment and total interest.
It gives the break-even point: how many months of savings it takes to recover the closing costs.
When refinancing is worth it
Refinancing replaces your existing mortgage with a new one, normally to get a lower rate, change the term, or take cash out of your equity.
It is not free. Closing costs typically run 2% to 5% of the loan, so the monthly saving has to recover them before you gain anything. That is the break-even, and it is the number that decides whether to do it.
There is a second cost that lenders rarely lead with. Refinancing a loan you are seven years into back to a fresh 30-year term means paying interest for 37 years in total. The monthly payment falls; the lifetime interest can rise.
Staying past 20 months means the refinance pays. Moving or refinancing again before then means it cost you money.
What to enter
- Current balance and rate
- The remaining balance, not the original loan amount, and the rate you pay now.
- Years remaining
- Important, because comparing against a fresh 30-year term is not comparing like with like.
- New rate and term
- What you are being offered. Matching your remaining term gives the honest comparison.
- Closing costs
- Typically 2-5% of the loan. Appraisal, origination, title and recording. This is what the break-even has to recover.
- How long you will stay
- The deciding input. A refinance that breaks even in 20 months is worthless if you move in 12.
What this assumes
Closing costs are paid upfront. Rolling them into the loan means paying interest on them for the whole term.
The comparison assumes you keep both loans to term. Moving or refinancing again changes the answer.
How to calculate a mortgage refinance
Find the monthly saving, then divide the closing costs by it.
- monthly saving
- Current payment minus new payment
- break-even
- How long you must stay for the refinance to pay for itself
Work out the new payment. On your current balance at the new rate and term.
Subtract it from your current payment. That is the monthly saving. If it is small, the break-even will be long.
Divide the closing costs by the saving. $6,000 of costs against $298.99 a month is 20.1 months.
Compare against how long you will stay. Comfortably longer than the break-even means it is worth doing. Close to it, or shorter, means it is not.
See a worked example: a refinance that pays, and the catch
- Balance
- $300,000
- Rate
- 7.5% now, 6.0% offered
- Closing costs
- $6,000
Current payment: $2,097.64. New payment at 6.0% over 30 years: $1,798.65.
Saving: $298.99 a month. Break-even: $6,000 ÷ $298.99 = 20.1 months.
So staying under two years makes it a loss, and staying five years saves about $11,900 net.
The catch: if you were already seven years into the old loan, this resets you to 30 years and you will be paying for 37 in total. Refinancing into a 23-year term instead keeps the finish line where it was.
$298.99 a month, break-even at 20 months
Frequently asked questions
- How much lower does the rate need to be?
The old rule of thumb was a full percentage point, but it depends entirely on your balance and costs. A quarter point on a large loan can beat a full point on a small one.
Use the break-even instead. Work out the monthly saving, divide the closing costs by it, and compare against how long you will stay.
- What does refinancing cost?
Typically 2% to 5% of the loan amount: appraisal, origination, title insurance, recording fees and prepaid items.
On a $300,000 refinance that is $6,000 to $15,000. Ask for a Loan Estimate, which is a standardised form that makes comparing lenders straightforward.
- What is a no-closing-cost refinance?
The costs are covered by a slightly higher rate, or added to the balance. They do not disappear; they are paid differently.
It can genuinely be the better option if you might move within a few years, because there is nothing to recover. Over a long hold, paying upfront usually costs less.
- Should I refinance into a shorter term?
Often, yes. It keeps the total interest down and avoids restarting the clock, though the payment will be higher than a 30-year refinance.
If you are seven years into a 30-year loan, ask about a 23-year term. Many lenders will write a custom term, and it preserves the progress you have already made.
- What is a cash-out refinance?
Replacing your mortgage with a larger one and taking the difference in cash. It converts equity into money at mortgage rates, which are usually lower than other borrowing.
It also means a bigger loan, a higher payment, and less equity. Compare it against a HELOC or home equity loan, which leave your existing rate untouched.
- Does refinancing hurt my credit score?
Slightly and temporarily. The hard inquiry and the new account both have a small effect, and it recovers within months.
Rate shopping is handled sensibly: multiple mortgage inquiries within a short window are usually counted as one, so comparing several lenders does not multiply the damage.
Problems people actually run into
Restarting the 30-year clock every time
Each refinance back to a fresh 30-year term resets the amortisation, which means going back to payments that are mostly interest.
Someone who refinances twice, seven years in each time, can spend more than 40 years paying for a 30-year mortgage. Match the new term to what was left, or shorter.
Deciding on the monthly payment alone
A lower payment always looks like a win, and it can come from a longer term rather than a better rate. That is a more expensive loan presented as a cheaper one.
Compare three things: the break-even, the new rate against the old one, and the total interest over the remaining years.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026
