Mortgage Refinance Calculator
Compare your current mortgage to a refinanced loan. See your new payment, monthly savings, breakeven point, and total savings over the life of the loan.
Quick Answer
Refinancing makes financial sense when your monthly savings recoup closing costs before you plan to move. A 1% rate reduction on a $300,000 balance typically saves $175-$200/month. With $5,000 in closing costs, you would break even in about 25-29 months. After that, every month of savings is pure benefit.
Current Loan
New Loan
Typically 2-6% of loan amount
Loan Comparison
| Current Loan | New Loan | Difference | |
|---|---|---|---|
| Interest Rate | 6.500% | 5.500% | -1.000% |
| Loan Term | 25 years | 30 years | 5 years |
| Monthly Payment | $2,025.62 | $1,703.37 | -$322.25 |
| Total Interest | $307,686 | $313,212 | $5,526 |
| Total Cost | $607,686 | $618,212 | $10,526 |
Refinancing May Not Be Worth It
With these terms, refinancing would cost you $10,526 more over the life of the loan. Consider a shorter term, lower rate, or lower closing costs to make refinancing worthwhile.
About This Tool
The Mortgage Refinance Calculator helps you determine whether refinancing your current mortgage makes financial sense. By comparing your current loan terms to a potential new loan, this tool calculates your new monthly payment, monthly savings, the breakeven point where savings exceed closing costs, and the total savings over the life of the loan.
Refinancing replaces your existing mortgage with a new one, ideally at better terms. Homeowners refinance for several reasons: to lower their interest rate and monthly payment, to shorten their loan term and build equity faster, to switch from an adjustable-rate to a fixed-rate mortgage, or to access home equity through a cash-out refinance. This calculator focuses on rate-and-term refinancing, the most common type.
Understanding the Breakeven Point
The breakeven point is the most critical number in any refinance decision. It tells you how many months it takes for your cumulative monthly savings to equal the closing costs you paid upfront. If you plan to sell or move before reaching breakeven, refinancing will cost you money rather than save it. As a general rule, if your breakeven is under 24 months and you plan to stay in your home for at least 3-5 more years, refinancing is likely a good financial move.
Rate Reduction vs. Term Reduction
When refinancing, you have two main strategies. A rate reduction keeps a similar term but lowers your interest rate, reducing your monthly payment and total interest. A term reduction shortens your loan (for example, from 30 years to 15 years), which typically comes with a lower rate and dramatically reduces total interest paid, but increases your monthly payment. Some borrowers combine both strategies by refinancing to a shorter term at a lower rate. This calculator lets you model any combination of rate and term changes.
The Hidden Cost of Extending Your Term
One common pitfall is refinancing into a new 30-year term when you have already paid several years on your current mortgage. While this lowers your monthly payment, it resets the amortization clock, meaning you will pay interest for more total years. For example, if you have 25 years remaining and refinance into a new 30-year loan, you are adding 5 years of payments. This calculator accounts for this by comparing total costs over each loan's full term, so you can see whether the rate reduction outweighs the extended timeline.
When to Refinance
The best time to refinance depends on several factors: the current interest rate environment relative to your existing rate, how long you plan to stay in your home, your credit score (better scores qualify for lower rates), your home equity (at least 20% equity avoids PMI on the new loan), and the closing costs being charged. A commonly cited rule of thumb is that refinancing makes sense when you can reduce your rate by at least 0.75% to 1%, but the breakeven calculation is a more precise way to evaluate the decision for your specific situation.