Mortgage Refinance Calculator
Calculate your potential refinancing savings, compare monthly payments, and find your break-even point. Enter your current mortgage details and proposed new loan terms to see whether refinancing makes financial sense for your situation — all free, with no signup required.
Current Loan Information
Auto-calculated Payment: $1,688
Based on your loan balance, rate, and remaining term
Refinancing Recommended
You could save money by refinancing
Key Metrics
Payment Comparison
Cost Analysis
How to Use This Refinance Calculator
Step-by-Step Guide
Enter Your Current Loan Details
Start with the Current Loan tab. Enter your remaining loan balance, current interest rate, and how many years are left on your mortgage. You can let the calculator auto-compute your current monthly payment, or switch to manual entry if you know your exact payment amount (useful if your payment includes escrow for taxes and insurance).
Enter New Loan Terms
Switch to the New Loan tab and enter the interest rate you have been quoted or expect to receive, along with the new loan term in years. Try different combinations to see how a 15-year term compares to a 30-year term, or how a small rate difference changes your savings. The new loan amount is assumed to equal your current remaining balance.
Add Refinancing Costs
Use the Refinance Costs tab to enter your expected closing costs, appraisal fee, origination fee, title insurance, and any other fees. You can enter closing costs and origination fees as either a dollar amount or a percentage of the loan. Accurate cost estimates are critical because they directly determine your break-even point.
Analyze Your Results
The results panel shows a clear recommendation — whether to refinance or keep your current loan. Review the monthly savings, break-even point, and total savings after costs. The payment comparison shows your current vs. new payment side by side, and the cost analysis breaks down how refinancing costs offset your interest savings over time.
Understanding Your Results
Refinancing Recommendation
The green "YES, REFINANCE" or red "NO, KEEP CURRENT LOAN" badge gives you a clear bottom-line answer. This is based on whether your total savings after closing costs are positive — meaning you come out ahead financially by refinancing.
Monthly Savings
This shows the difference between your current monthly payment and the new payment. A positive number means your payment goes down. Note that a lower monthly payment does not always mean you save money overall — if you extend your term, you may pay more in total interest.
Break-Even Point
The number of months until your cumulative monthly savings equal the total closing costs. If you plan to stay in the home longer than this period, refinancing is beneficial. If the break-even shows "Never," it means your new payment is higher than your current payment and the refinance does not produce monthly savings.
Total Savings After Costs
This is the bottom line: your total interest savings minus all refinancing costs. A positive number means refinancing saves you money over the life of the loan. This figure accounts for the fact that refinancing resets your amortization schedule, so it captures the true net benefit.
How Mortgage Refinancing Works
Mortgage refinancing is the process of replacing your existing mortgage with a brand-new loan, typically to get a lower interest rate, change the loan term, or access home equity. When you refinance, your new lender pays off your old mortgage in full and issues a new loan with new terms. From that point forward, you make payments on the new loan as if you had just purchased the home.
Rate-and-Term Refinancing vs. Cash-Out Refinancing
There are two primary types of refinancing. Rate-and-term refinancing changes your interest rate, loan term, or both, without increasing the loan balance beyond the existing payoff amount plus closing costs. This is the most common type and is used purely to save money or change payment structure. Cash-out refinancing replaces your mortgage with a larger loan and gives you the difference in cash. For example, if you owe $200,000 on a home appraised at $350,000, you might refinance for $260,000 and receive $60,000 in cash (less closing costs). Cash-out refinancing carries higher rates than rate-and-term refinancing and most lenders limit it to 80% loan-to-value.
The Amortization Reset Problem
One of the most commonly overlooked aspects of refinancing is that it resets your amortization schedule. When you refinance a 30-year mortgage into a new 30-year mortgage, you start over at the beginning of the amortization curve, where most of each payment goes toward interest rather than principal. If you are 10 years into a 30-year mortgage, you have been paying mostly interest and are just starting to make real progress on principal reduction. Refinancing into a new 30-year term throws away that progress and puts you back at the start.
This is why you can sometimes lower your monthly payment through refinancing but actually pay more in total interest over the life of the loan. For example, if you have 20 years left on a $250,000 mortgage at 7% and refinance to a new 30-year mortgage at 6%, your monthly payment drops by about $250. But over 30 years at the new rate, you pay roughly $40,000 more in total interest than you would have by keeping the old loan for its remaining 20 years. To avoid this trap, consider refinancing to a term that matches or is shorter than your remaining term.
The Closing Cost Trade-Off
Refinancing is not free. Closing costs typically range from 2% to 5% of the loan amount, which on a $300,000 mortgage means $6,000 to $15,000 out of pocket. These costs include loan origination fees, appraisal, title search and insurance, recording fees, and various administrative charges. You must recoup these costs through monthly savings before the refinance becomes profitable. This is what makes the break-even point so critical — it tells you exactly how long it takes to recover your investment. Some lenders offer "no-closing-cost" refinancing, but this simply rolls the costs into a higher interest rate, meaning you pay for them over the life of the loan through increased monthly payments.
When Should You Refinance Your Mortgage?
Good Reasons to Refinance
- •Interest rates have dropped 0.75% to 1% or more since you took out your current mortgage. A 1% rate reduction on a $300,000 loan saves roughly $180 per month and over $60,000 in total interest on a 30-year term. Even a 0.75% drop can be worthwhile if you plan to stay long-term.
- •Your credit score has improved significantly since your original mortgage. If you bought your home with a 660 credit score and now have a 760, you could qualify for a rate 0.5% to 1% lower, saving thousands over the remaining loan term without waiting for market rates to change.
- •You want to switch from an ARM to a fixed rate. If your adjustable-rate mortgage is approaching the end of its initial fixed period and you are concerned about rate increases, locking in a fixed rate provides long-term payment predictability and protection against rising rates.
- •You have reached 20% equity and want to remove PMI. If your home has appreciated or you have paid down enough principal, refinancing can eliminate PMI and reduce your monthly payment. However, first check if your lender will cancel PMI without a full refinance, which would be cheaper.
When to Reconsider
- •You plan to move before the break-even point. If closing costs are $8,000 and you save $200 per month, your break-even is 40 months. If you sell in 24 months, you lose $3,200 on the transaction. Always calculate the break-even period before committing to a refinance.
- •You are far into your current mortgage term. If you are 20 years into a 30-year mortgage, most of your payment is now going toward principal. Refinancing into a new 30-year term resets this, and you will pay mostly interest again for years. Consider a shorter term if you do refinance.
- •The rate difference is small and your loan balance is low. Saving 0.25% on a $100,000 remaining balance only saves about $15 per month. With $5,000 in closing costs, it takes nearly 28 years to break even — longer than the loan itself. Small rate differences only justify refinancing on larger loan balances.
- •You are using cash-out refinancing for non-essential spending. Borrowing against your home equity for vacations, consumer goods, or other depreciating purchases puts your home at risk and increases your total mortgage cost. Reserve cash-out refinancing for investments that build value, such as home improvements or high-interest debt consolidation.
Understanding the Break-Even Point
The break-even point is arguably the single most important metric when evaluating a refinance. It tells you exactly how long you need to stay in your home with the new mortgage before the refinancing pays for itself. Every month after the break-even point, you are saving money. Every month before it, you are still paying back the closing costs.
How to Calculate the Break-Even Point
The basic formula is straightforward: Break-Even Months = Total Closing Costs / Monthly Savings. For example, if your refinancing costs total $7,500 and your new monthly payment is $250 less than your current payment, the break-even point is $7,500 / $250 = 30 months, or 2.5 years. After 30 months of making the lower payment, you have recouped the $7,500 in closing costs entirely through the accumulated monthly savings. From month 31 onward, you pocket the full $250 per month in savings.
A Worked Example
Consider a homeowner with a $300,000 remaining balance, 25 years left at 7.5%, and a current monthly payment of $2,221 for principal and interest. They receive an offer to refinance at 6.5% for a new 25-year term with $9,000 in total closing costs. The new monthly payment would be $2,028, saving $193 per month. The break-even point is $9,000 / $193 = approximately 47 months, or about 4 years. If the homeowner plans to stay at least 5 years, the refinance is worthwhile — they would save approximately $2,580 beyond the break-even point in the fifth year alone. Over the remaining 25 years, total savings after closing costs would be roughly $48,800.
Why the Break-Even Point Matters More Than the Rate
Many homeowners focus solely on the interest rate, but the break-even point is what actually determines whether refinancing makes financial sense for your specific situation. A refinance from 7% to 6% looks great on paper, but if closing costs are $15,000 and you only save $150 per month, the break-even point is 100 months — over 8 years. If you sell the house in 5 years, you lost $6,000. Conversely, a refinance from 7% to 6.75% with only $2,000 in closing costs and $75 per month in savings breaks even in just 27 months — a much better deal if you plan to stay at least 3 years. Always run the numbers through a calculator rather than relying on the rate difference alone.
Refinancing Costs and Fees
Common Refinancing Fees
- •Origination fee (0.5% to 1% of loan amount): Charged by the lender for processing and underwriting the new loan. On a $300,000 loan, this ranges from $1,500 to $3,000. Some lenders waive the origination fee in exchange for a slightly higher interest rate.
- •Appraisal fee ($300 to $600): Required by most lenders to verify the home's current market value. The appraiser inspects the property and compares it to recent sales of similar homes. Some streamline refinance programs waive the appraisal requirement.
- •Title search and insurance ($700 to $1,500): The title company verifies that the property title is clear of liens and issues a new title insurance policy protecting the lender. Some states require a new owner's policy as well.
- •Recording fees ($50 to $250): Charged by your local government to record the new mortgage and release the old one in public records. These fees vary by county and state.
Comparing Cost Options
Pay Closing Costs Upfront
The most cost-effective option if you plan to keep the loan for several years or longer. You pay the full closing costs out of pocket at closing and receive the lowest available interest rate. This gives you the shortest break-even point and the most total savings over the life of the loan.
Roll Costs Into the Loan Balance
Some lenders allow you to add closing costs to the new loan balance. This avoids out-of-pocket expense, but you pay interest on the closing costs for the entire loan term. On a $10,000 closing cost added to a 30-year loan at 6.5%, you pay approximately $12,750 in interest on those costs alone — more than doubling their effective price.
No-Closing-Cost Refinance
The lender covers your closing costs in exchange for a higher interest rate, typically 0.125% to 0.375% more. This can make sense if you plan to sell or refinance again within a few years, since you avoid paying costs you would not recoup. However, if you keep the loan long-term, the higher rate costs significantly more than paying upfront. Always compare the total cost of both options over your expected time in the home.
Frequently Asked Questions
When does it make sense to refinance my mortgage?
Refinancing generally makes sense when you can lower your interest rate by at least 0.75% to 1%, and you plan to stay in the home long enough to recoup the closing costs through monthly savings. Other good reasons include switching from an adjustable-rate mortgage (ARM) to a fixed-rate for payment stability, removing PMI by refinancing once you have 20% equity, shortening your loan term from 30 years to 15 years to build equity faster and pay less total interest, or doing a cash-out refinance for major expenses like home improvements that add value. The key metric is always the break-even point — if you will sell or move before you break even on closing costs, refinancing does not make financial sense regardless of the rate improvement.
What is the break-even point on a refinance?
The break-even point is the number of months it takes for your monthly savings to equal the total cost of refinancing. You calculate it by dividing your total closing costs by your monthly payment savings. For example, if refinancing costs $6,000 and saves you $200 per month, your break-even point is 30 months (2.5 years). After 30 months, every dollar saved is pure profit. This is the single most important metric when evaluating a refinance — if you plan to stay in your home for at least that long, refinancing is likely worthwhile. If you might move before the break-even point, you will lose money on the transaction because the closing costs exceed the savings you accumulated.
How much does it cost to refinance a mortgage?
Refinancing typically costs 2% to 5% of the loan amount in closing costs. On a $300,000 loan, that means $6,000 to $15,000. Common costs include the origination fee (0.5% to 1% of the loan amount), appraisal fee ($300 to $600), title search and title insurance ($700 to $1,500), recording fees ($50 to $250), credit report fee ($25 to $50), and flood certification ($15 to $25). Some lenders offer no-closing-cost refinancing, but this typically means a higher interest rate — the costs are not eliminated, they are spread across the life of the loan through increased interest. It is usually better to pay closing costs upfront if you plan to keep the loan for several years.
Should I refinance to a 15-year or 30-year mortgage?
The choice depends on your financial goals and budget flexibility. A 15-year refinance offers a lower interest rate (typically 0.5% to 0.75% less than a 30-year), dramatically less total interest (often saving $100,000 or more), and faster equity building. However, the monthly payments are 40% to 50% higher. A 30-year refinance offers the lowest possible monthly payment, maximizing cash flow for other investments or expenses. If you are refinancing to lower your payment and create breathing room, a 30-year term makes sense. If you can comfortably afford higher payments and want to pay off your home faster, a 15-year term saves substantially more money long-term. Some borrowers choose a 30-year term but make extra payments as if it were a 15-year — giving them flexibility to reduce payments during tight months.
What is a cash-out refinance and when should I use one?
A cash-out refinance replaces your existing mortgage with a new, larger loan, and you receive the difference in cash. For example, if you owe $200,000 on a home worth $350,000, you might refinance for $280,000 and receive $80,000 in cash (minus closing costs). This can be a good option for funding home improvements that add value, consolidating high-interest debt (credit cards at 20%+ into a mortgage at 6-7%), or funding major expenses like education. However, cash-out refinancing increases your loan balance and monthly payment, extends the time to pay off your home, and puts your property at risk if you cannot make payments. It should not be used for discretionary spending, vacations, or purchases that lose value. Most lenders limit cash-out refinancing to 80% of your home value.
Does refinancing hurt my credit score?
Refinancing causes a small, temporary dip in your credit score — typically 5 to 10 points — due to the hard credit inquiry and the new account appearing on your credit report. This effect usually recovers within a few months. If you rate-shop by applying to multiple lenders within a 14 to 45 day window (depending on the scoring model), all the inquiries are treated as a single inquiry, minimizing the impact. Closing your old mortgage account may also slightly reduce your score by shortening your average account age, but this effect is minor. The long-term financial benefits of a well-timed refinance far outweigh the temporary credit score impact.
Can I refinance if I have less than 20% equity?
Yes, you can refinance with less than 20% equity, but your options may be more limited and more expensive. Conventional refinancing with less than 20% equity typically requires Private Mortgage Insurance (PMI), which adds to your monthly payment and may reduce or eliminate the savings from a lower rate. FHA Streamline refinancing is available for existing FHA loans with minimal documentation and no appraisal requirement, even with low equity. VA Interest Rate Reduction Refinance Loans (IRRRLs) are available to veterans with existing VA loans. Some lenders offer conventional refinancing at up to 95% or even 97% loan-to-value, though the rates and PMI costs will be higher. If you are underwater (owe more than the home is worth), options are very limited and may require special programs.
Related Calculators
Mortgage Calculator
Calculate monthly mortgage payments including principal, interest, taxes, and insurance.
Real EstateHome Affordability Calculator
Find out how much house you can afford based on income and debt.
LoansLoan Comparison Calculator
Compare multiple loan offers side-by-side to find the best deal.
LoansPersonal Loan Calculator
Calculate personal loan payments, total interest, and compare loan offers.