Refinance Calculator

Compare your current mortgage against a new rate and term to find your monthly saving, how long it takes to break even on closing costs, and what it does to total interest.

Refinance closing costs usually run about 2% to 5% of the loan amount, covering origination, appraisal, title and recording. Enter the years left on your current loan rather than its original term — comparing a fresh 30-year loan against your original 30 years overstates the saving considerably.

How you pay the closing costs

Rolling the costs in removes the upfront cheque but finances the fee at your new rate for the whole term, so the monthly saving shrinks and the lifetime cost grows. Either way the money counts against you in the lifetime interest comparison below — a “no cost” refinance is a financed cost, not a free one.

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HOW IT WORKS

How does the refinance calculator work?

The calculator prices your remaining loan and a proposed new one, then reports the monthly difference, how long the saving takes to repay your closing costs, and whether the new loan costs more or less in total interest across its full term.

1

Describe your current loan

Balance, rate, and — importantly — the years remaining, not the original term.

2

Enter the offer

The new rate, the new term, and the closing costs from the lender's estimate.

3

Check both tests

Break-even point for the short run, lifetime interest for the long run.

A lower payment is not the same as a cheaper loan

This is the trap that catches most refinances. If you are seven years into a 30-year mortgage and you refinance into a fresh 30-year term, the payment falls for two separate reasons: the better rate, and the fact that you have just given yourself seven extra years to repay the balance. The first genuinely saves money. The second moves cost into the future and usually adds to it.

That is why this calculator asks how many years are left on your current loan, and why it reports lifetime interest alongside the monthly saving. A refinance can lower your payment by $300 a month and still cost you tens of thousands more over the full term. Both facts can be true at once, and both belong in the decision.

THE CALCULATIONBreak-even months = closing costs ÷ monthly saving

Monthly saving = current payment − new payment. Lifetime difference = interest on the new loan + closing costs − interest remaining on the current loan. A positive lifetime figure means the refinance costs more overall.

Worked example: a genuine rate improvement

EXAMPLE 1

$320,000 balance, 27 years left at 7.25%, refinancing to 5.75% over 30 years, $6,000 costs

A large rate drop, but the term resets from 27 years to 30 — so the payment saving overstates the true benefit.

  1. Current payment: $320,000 over 324 months at 7.25% is about $2,253 a month.
  2. New payment: $320,000 over 360 months at 5.75% is about $1,867 a month.
  3. Monthly saving: roughly $386.
  4. Break-even: $6,000 ÷ $386 = 16 months.

Result: a strong refinance — the 1.5 point rate drop is large enough that lifetime interest falls about $51,800 even after the term resets and costs are counted.

Worked example: the payment falls, the cost rises

EXAMPLE 2

The same balance, but only a small rate improvement and a fresh 30-year term

Where the rate gain is modest, the extra years do the heavy lifting on the payment — and that is borrowed relief, not saved money.

  1. The monthly payment still falls, because the balance is spread across more months.
  2. The break-even test still passes, because closing costs are recovered from that lower payment.
  3. But lifetime interest rises, because you are paying interest on a large balance for years longer than you would have.

Result: try a 15 or 20-year new term in the calculator — a shorter term often turns a lifetime loss into a gain while still lowering the rate you pay.

Understanding each result

Monthly saving is the difference in principal and interest between the two loans. It shows in red if the new payment is higher, which happens when you shorten the term deliberately.

Break-even point is how long the saving takes to repay your closing costs. Compare it honestly against how long you expect to keep the home.

Lifetime interest added or saved compares total interest on the new loan plus closing costs against the interest remaining on your current loan. Red means the refinance costs more across the full term even though the payment fell.

Current and new payment are principal and interest only. Property tax and insurance are typically unchanged by a refinance, so they are excluded from the comparison rather than added to both sides.

What this calculator doesn't model

It compares fixed-rate loans on principal and interest, so it does not cover adjustable-rate products after their initial period, cash-out refinances that increase the balance beyond closing costs, mortgage points bought to lower the rate, PMI that a refinance might add or remove, or the tax treatment of mortgage interest. It also cannot judge what your closing costs would earn if invested instead. Use it to compare offers, then confirm against each lender's Loan Estimate.

Common ways to use this calculator

Testing a lender's offer

Check whether the advertised saving survives the break-even and lifetime tests.

Choosing a new term

Compare a fresh 30 years against 20 or 15 to see what the shorter term is worth.

Weighing “no cost” offers

Switch closing costs to rolled-in and watch the lifetime figure move.

Timing a move

See whether you will still own the home by the time you break even.

Privacy and appropriate use

Your inputs are processed directly in your browser and are not sent to a database. This is a planning-stage comparison, not a loan offer, a rate quote, or financial advice — confirm every figure with your lender before committing to a refinance.

Compare the two loans ↑Buying instead? Use the mortgage calculator →
FREQUENTLY ASKED QUESTIONS

Questions about the refinance calculator.

Clear answers about break-even points, closing costs, and when a lower payment costs more.

How do I know if refinancing is worth it?

Two tests, and both matter. The break-even point tells you how many months of savings it takes to recover your closing costs — if you might sell or refinance again before then, the deal loses money. The lifetime interest comparison tells you whether the new loan actually costs less overall, which a lower monthly payment does not guarantee. A refinance that passes the first test and fails the second is common, and it can still be the right decision if freeing up monthly cash flow is the goal, as long as you know that is the trade you are making.

What is the break-even point on a refinance?

It is your closing costs divided by your monthly saving. If refinancing costs $6,000 and saves $250 a month, you break even after 24 months. Before that point you are behind; after it, the saving is genuinely yours. The single most useful thing to know is how long you plan to stay in the home — a 30-month break-even is excellent if you are staying a decade and pointless if you are moving next year.

Why does the calculator ask for years left, not the original term?

Because comparing a fresh 30-year loan against your original 30-year term overstates the saving badly. If you are seven years into a 30-year mortgage, your real alternative is 23 more years of the current payment, not 30. Entering years remaining is what makes the lifetime interest comparison honest — and it is usually the reason a refinance that looks like a clear win on payment alone turns out to add interest overall.

Does a lower monthly payment mean a cheaper loan?

Not necessarily, and this is the most common misunderstanding in refinancing. Resetting a partly paid loan back to a fresh 30-year term lowers the payment partly through the lower rate and partly by stretching the balance over more years. The second effect adds interest even as it reduces the payment. The calculator shows both figures side by side for exactly this reason — check the lifetime interest number before deciding, and try a shorter new term to see the difference.

What are typical refinance closing costs?

Generally 2% to 5% of the loan amount, covering lender origination, appraisal, title search and insurance, credit report, and recording fees. On a $320,000 refinance that is roughly $6,400 to $16,000. Costs vary by lender and state, so get a Loan Estimate — a standardised form every lender must provide — and compare the bottom-line figure across two or three of them rather than comparing advertised rates alone.

What is a 'no closing cost' refinance?

It is a refinance where the costs are either rolled into the loan balance or covered by accepting a higher interest rate. Neither is free. Rolling costs in means financing them at your new rate for the whole term, which shrinks the monthly saving and increases lifetime cost. A lender credit in exchange for a higher rate does the same thing more subtly. Switch the closing cost setting in the calculator to see the difference against paying upfront.

How much does my rate need to drop to be worth it?

The old rule of thumb was a full percentage point, but it was never accurate because it ignores loan size and how long you stay. A 0.5% drop on a large balance you will hold for years can beat a 1.5% drop on a small balance you will sell in two. Run your own numbers rather than relying on a threshold — the break-even point and lifetime interest figures answer the question directly for your situation.

Does refinancing hurt my credit score?

Modestly and temporarily. The lender's hard inquiry and the new account typically cause a small dip that recovers over several months of on-time payments. Rate shopping across multiple lenders within a short window is generally treated as a single inquiry by the main scoring models, so comparing offers does not multiply the effect. Closing a long-held mortgage account can also slightly shorten your average account age.

Is this financial advice?

No. This is a calculation tool that compares two loans on the figures you enter. It does not know your tax position, your job security, your other debts, or how long you will stay in the home — all of which bear on whether a refinance is sensible. Confirm the numbers against a lender's Loan Estimate, and speak to a qualified advisor about your own circumstances before committing.

Is my data stored?

No. All inputs and calculations run directly in your browser and are not sent to a server or saved in an account. General site usage may be measured through Google Analytics as described in our Privacy Policy.