Mortgage Refinance Calculator

About the Mortgage Refinance Calculator

Refinancing your mortgage means replacing your current loan with a new one — typically at a lower interest rate, shorter term, or both. While refinancing can save you thousands in interest, it comes with closing costs that must be recouped through lower payments before you truly start saving.

This calculator compares your current mortgage to a potential refinance scenario. It shows the new monthly payment, total interest savings over the remaining life of the loan, and the critical break-even point — the number of months it takes for your payment savings to exceed the closing costs.

Understanding the break-even timeline is essential. If you plan to sell or move before reaching that point, refinancing may actually cost you money. Use this calculator to make a data-driven decision about whether refinancing is right for your situation. Running the numbers before committing ensures the savings justify the upfront costs and time investment.

When This Page Helps

Refinancing decisions involve multiple variables — remaining balance, current rate vs new rate, closing costs, and how long you plan to stay in the home. This calculator distills all of those into clear outputs: payment change, total savings, and the break-even month.

Without running these numbers, many homeowners either refinance too early (paying costs they never recoup) or too late (missing years of savings).

How to Use the Inputs

1. Enter your current loan balance (remaining principal).
2. Enter your current interest rate and remaining term.
3. Enter the new loan's interest rate and term.
4. Enter the estimated closing costs for the refinance.
5. Review the monthly payment comparison and break-even month.
6. If the break-even month is shorter than your expected stay, refinancing likely makes sense.

Example Calculation

Tips & Best Practices

• A common rule of thumb: refinance if you can lower your rate by at least 0.75-1.0% — but always run the actual numbers.
• Ask about "no-closing-cost" refinances where the lender covers costs in exchange for a slightly higher rate.
• Consider a shorter term (e.g., 20 or 25 years) when refinancing to avoid resetting the clock to 30 years.
• Include all closing costs: origination fee, appraisal, title insurance, recording fees, and prepaid items.
• If you are within 10 years of paying off your mortgage, refinancing to a new 30-year term may cost more in total interest.
• Rate-and-term refinances typically have lower closing costs than cash-out refinances.
• Lock your rate once you decide — rates can change between application and closing.

The Break-Even Decision

The break-even point is the single most important number in any refinance decision. It tells you how many months of lower payments you need to recoup your closing costs. If you plan to stay in your home longer than the break-even period, refinancing is likely beneficial. If not, the upfront costs outweigh the savings.

Rate Drops vs Term Changes

There are two main refinancing strategies: lowering your rate on the same term length, or shortening your term. A rate drop on the same term gives you immediate monthly savings. A term reduction may increase your payment but saves dramatically on total interest. The best strategy depends on your budget flexibility and financial goals.

The Hidden Cost of Resetting the Clock

If you are 8 years into a 30-year mortgage and refinance to a new 30-year, you add 8 years of payments. Even at a lower rate, the additional years of interest can offset the rate reduction. Consider refinancing to a 20 or 25-year term to match your original payoff timeline while still capturing the lower rate.

Frequently Asked Questions

• When does it make sense to refinance?

  Refinancing makes sense when you can lower your rate enough to recoup closing costs before you sell or move. If the break-even point is 24 months and you plan to stay for 10 years, you will benefit for 8 years of net savings.

• What are typical refinance closing costs?

  Closing costs typically range from 2-5% of the loan amount. On a $280,000 loan, expect $5,600-$14,000. Costs include appraisal ($300-$600), title insurance ($700-$1,200), origination fees (0.5-1%), and various administrative fees.

• Should I refinance to a shorter term?

  If you can afford the higher payment, refinancing to a 15 or 20-year term at a lower rate can save enormous amounts in interest. However, if the payment increase is too aggressive, stick with a 30-year and make extra payments for flexibility.

• Does refinancing reset my mortgage clock?

  Yes. If you are 4 years into a 30-year mortgage and refinance to a new 30-year, your total payment period becomes 34 years. To avoid this, refinance to a shorter term or make extra payments to stay on your original payoff timeline.

• Can I roll closing costs into the new loan?

  Yes, most lenders allow you to roll closing costs into the loan balance. This means no out-of-pocket expense, but you will pay interest on those costs over the life of the loan. The break-even point remains similar because your payment reduction is slightly smaller.

• What credit score do I need to refinance?

  Most conventional refinances require a credit score of 620+, though the best rates go to borrowers with 740+. FHA streamline refinances may have lower requirements. Check with multiple lenders to find the best rate for your credit profile.

• How often can I refinance?

  There is no legal limit on how often you can refinance, but most lenders require 6-12 months between refinances. Each time you refinance, you pay closing costs, so frequent refinancing rarely makes financial sense.

• What is a cash-out refinance?

  A cash-out refinance replaces your mortgage with a larger loan, giving you the difference in cash. For example, if you owe $200,000 on a home worth $350,000, you could refinance for $250,000 and receive $50,000 cash. Rates are slightly higher than rate-and-term refinances.