Refinance Calculator

How this refinance calculator works

Refinancing replaces your current loan with a new one—usually to lower the rate, change the term, or tap equity. This tool compares the cash flow of keeping your existing mortgage versus taking a new fixed-rate loan.

We calculate the new principal-and-interest payment using your remaining balance plus closing costs rolled into the loan (a common “finance the fees” scenario). Monthly savings equal your current payment minus the new payment. Break-even months equal closing costs divided by monthly savings when savings are positive. Lifetime savings compare total payments left on the current loan with total payments on the new loan.

Example

Suppose you owe $250,000 at 7.5% with 25 years left and pay $1,850 per month. A 6.5% 30-year refinance with $5,000 closing costs may lower the monthly bill, but resetting the clock to 30 years can erase or reverse lifetime savings. The break-even figure tells you how many months you need to stay in the home before fee recovery makes sense.

When refinancing often helps

• You can cut the rate enough that break-even happens well before you plan to move or sell
• You refinance to a shorter term and can afford the higher payment to save interest
• You remove PMI after building enough equity (model that separately with your lender)

When it may not help

• Closing costs are high and you expect to move before break-even
• You stretch from ~20 years remaining back to 30 years mainly for a lower payment
• Cash-out amounts or credit pricing raise the new rate more than you expect

Limitations

• Assumes fixed-rate loans and level payments; ARMs and interest-only products differ
• Does not model tax deductibility of mortgage interest or points
• Does not include escrow changes for taxes and insurance
• Rolling closing costs into the loan increases principal; paying fees in cash would change the math

Frequently asked questions

What is a good break-even period?

Many homeowners look for break-even within roughly 24–36 months, but the right number depends on how long you will keep the home and loan. If you might move in a year, even a large rate cut may not pay for itself.

Should I refinance to a 30-year term again?

A new 30-year term can lower the payment yet increase total interest. Compare lifetime savings, not only the monthly change. Sometimes a 15- or 20-year refinance is the better wealth move if cash flow allows.

Are closing costs always required?

Most refinances have costs, though lenders may offer credits in exchange for a higher rate. Enter realistic fees from a Loan Estimate—not a round number guess—when you can.

Does this replace talking to a lender?

No. Use it to screen offers, then confirm APR, fees, and eligibility with a licensed professional. Also see our mortgage calculator for a simple payment check on any quote.