Mortgage Refinance Calculator
How to Use This Calculator
- 1
Enter the current mortgage
Fill in Current Loan Balance ($), Current Interest Rate (%), and Remaining Term (years). Enter the unpaid balance and the time left on the existing loan.
- 2
Enter the proposed refinance
Type New Loan Amount ($), New Interest Rate (%), New Loan Term (years), and Closing Costs ($). Payments Per Year is usually 12 for monthly payments.
- 3
Compare payment, break-even, and lifetime cost
The break-even result divides closing costs by monthly payment savings and rounds up to a whole payment period. Lifetime Savings compares scheduled payments over each full term and includes the entered closing costs.
Example Calculation
A homeowner compares a $250,000 current balance at 6.5% with a $250,000 refinance at 5%, extending the loan to 30 years and paying $5,000 in closing costs.
Current Loan Balance ($)
250,000
Current Interest Rate (%)
6.5
Remaining Term (years)
25
New Loan Amount ($)
250,000
New Interest Rate (%)
5
New Loan Term (years)
30
Closing Costs ($)
5,000
Payments Per Year
12
Results
Monthly Savings
$345.96
Current Monthly Payment
$1,688.02
New Monthly Payment
$1,342.05
Break-Even Point
15 months
Lifetime Savings
$18,265.91
Total Interest Saved
$23,265.91
Tips
At $7,500 in closing costs, break-even moves to 22 months
Change Closing Costs ($) from 5,000 to 7,500 while keeping the loan terms unchanged. Monthly savings stay about $345.96, but the extra cost increases the simple break-even time to 22 months and lowers lifetime savings by $2,500.
At $2,500 in costs, break-even is 8 months
Try Closing Costs ($) of 2,500. The lower cost brings the simple break-even point to 8 months and raises lifetime savings by $2,500 compared with the original cost input.
A lower payment does not always mean a lower lifetime cost
Change New Loan Term (years) to see how extending repayment can reduce the monthly bill while adding years of interest. Compare total costs and your expected time in the home, not only the payment.
What this refinance calculator estimates
Mortgage refinancing replaces an existing loan with a new one, which can change the interest rate, payment, balance, and payoff date. This calculator compares principal-and-interest payments, simple break-even time, and scheduled lifetime cost; it does not include taxes, insurance, mortgage insurance, tax effects, or changes in home value.
How the refinance calculation works
Payment = P × r × (1 + r)^n / ((1 + r)^n − 1)
Monthly savings = Current payment − New payment
Break-even periods = ceiling(Closing costs / Monthly savings)
Lifetime savings = Current scheduled cost − New scheduled cost − Closing costs
P is the loan balance, r is the rate per payment period, and n is the number of payments. For the current loan, r = 0.065 ÷ 12 = 0.00541667 and n = 25 × 12 = 300; the payment formula gives about $1,688.02 per month. For the new loan, r = 0.05 ÷ 12 = 0.00416667 and n = 30 × 12 = 360, giving about $1,342.05.
The monthly difference is $1,688.02 − $1,342.05 = $345.96. Dividing $5,000 in closing costs by the unrounded monthly savings gives 14.45 periods, so the calculator rounds the simple break-even point up to 15 months.
For lifetime cost, the current schedule totals about $1,688.0179 × 300 = $506,405.37. The new schedule totals about $1,342.0541 × 360 = $483,139.46; adding $5,000 in closing costs gives $488,139.46. The difference is $506,405.37 − $488,139.46 = $18,265.91 in estimated lifetime savings. Because the calculator compares full loan terms, that figure assumes you keep each loan for its full modeled term.
How closing costs change break-even
Payment savings do not change when only the closing-cost input changes, but the break-even point and lifetime savings do.
| Closing costs | Simple break-even | Estimated lifetime savings |
|---|---|---|
| $2,500 | 8 months | $20,765.91 |
| $5,000 | 15 months | $18,265.91 |
| $7,500 | 22 months | $15,765.91 |
Break-even is a screening measure, not a complete decision rule. If you plan to move or refinance again before break-even, the payment savings may not recover the upfront cost. If you keep the new loan past break-even, check whether the longer term adds interest compared with keeping the current loan or choosing a shorter refinance term.
What to compare before refinancing
Request the lender's Loan Estimate and compare rate, APR, points, lender fees, and cash to close. The CFPB's guide to comparing Loan Estimates explains how to review the offer; this calculator uses the interest rate and one total closing-cost input rather than itemizing each fee.
- Estimate a new loan payment with escrow costs → Mortgage Calculator
- Focus on the cost-recovery period → Refinance Break-Even Calculator
- Compare interest costs between loan options → Refinance Interest Savings Calculator
- Assess a lower rate with a different mortgage structure → Adjustable Rate Mortgage (ARM) Calculator
Before acting, confirm whether the new loan amount includes financed closing costs and whether the quote includes points or mortgage insurance. A lower payment can result from a lower rate, a longer repayment term, or both, and those changes have different long-term costs.
Frequently Asked Questions
What is the break-even point when refinancing?
The break-even point is the number of payment periods needed for payment savings to equal closing costs. This calculator uses closing costs ÷ monthly payment savings and rounds up; it does not account for the time value of money, tax effects, or the cost of selling before break-even.
How long should I stay in my home to make refinancing worthwhile?
Plan to keep the loan long enough to pass the break-even point, then compare total costs over your actual expected holding period. The calculator's break-even measure is based only on payment savings, so it does not include a future sale, moving costs, or other changes to your finances.
Why can refinancing lower my payment but increase total interest?
A longer new term spreads repayment over more months, which can lower each payment while increasing the time interest accrues. Compare the term and total cost as well as the monthly payment; a [Mortgage Calculator](/calculators/mortgage-calculator/) can help examine alternative terms.
Should closing costs be added to the new loan amount?
Enter the actual proposed New Loan Amount ($), including financed costs if the lender rolls them into the balance. Enter Closing Costs ($) separately as well, because this calculator adds that field to the new loan's total cost; do not count the same cost twice.
Does this estimate include taxes, insurance, or mortgage insurance?
No; the payment comparison is principal and interest only. Property taxes, homeowners insurance, mortgage insurance, escrow changes, and any prepayment penalty can change the real monthly cost; ask the lender for a loan estimate and compare all fees.