How to use this mortgage refinance calculator
Enter what you owe now, your current rate, and the years you have left — not the original term. Then enter the new rate, the new term you're being offered, and the closing costs. If the lender is folding those costs into the loan, tick the box. Everything updates instantly.
The number most refinance calculators hide
A lower rate almost always produces a lower monthly payment, which is why a refinance can look like an easy win. But refinancing restarts the amortization clock. If you are six years into a 30-year mortgage and refinance into a fresh 30-year loan, you have just added six years of interest payments back onto the end — and early mortgage payments are overwhelmingly interest. It is entirely possible to cut your rate, cut your payment, and still pay more in total.
Break-even: the question that actually decides it
Closing costs are real money spent today to buy a lower payment tomorrow. The break-even point is simply how many months of savings it takes to earn that back. Spend $6,000 to save $250 a month and you break even at 24 months. Sell or refinance again before that, and the deal lost you money.
So the honest test is not "is the new rate lower?" but "am I confident I'll still be in this house, with this loan, well past the break-even month?" If you are not, the rate barely matters.
Ways to make a refinance work harder
- Refinance to a shorter term. Going from 26 remaining years to a 15-year loan often raises the payment but cuts total interest dramatically — the opposite trade from stretching the term.
- Keep paying your old payment. If the new payment is lower, sending the old amount anyway puts the whole difference against principal and shortens the loan.
- Compare Loan Estimates, not adverts. Every lender must give you a standardized Loan Estimate form. It makes closing costs directly comparable in a way that headline rates do not.
- Pay costs upfront if you can. Rolling them in means borrowing more and paying interest on the fees for decades.
Frequently asked questions
What is the break-even point on a refinance?
How long your monthly savings take to repay the closing costs — costs divided by monthly saving. If you'd move or refinance again before that month, the refinance costs you money.
Does a lower rate always mean a refinance saves money?
No. Restarting a loan you're years into can raise total interest even at a lower rate. Compare the lifetime interest figure, not just the monthly payment.
Should I roll closing costs into the loan?
It avoids cash upfront, but you borrow more and pay interest on those fees for the life of the loan. Paying upfront usually costs less overall if you'll stay past the break-even month.
How much does refinancing cost?
Commonly around 2%–6% of the loan amount — origination, appraisal, title and recording fees. Ask each lender for a Loan Estimate and enter the total above.
Related calculators & guides
This calculator is for educational and planning purposes only and provides estimates, not financial advice. It compares principal and interest only — taxes, insurance and PMI are unchanged by a refinance and are excluded on both sides. Actual costs depend on your lender's terms. See how we calculate.