Mortgage Refinance Calculator

Calculate your monthly savings, break-even point, and lifetime interest savings from refinancing. Find out exactly whether and when refinancing makes financial sense for your situation.

When does refinancing make sense?

Refinancing replaces your existing mortgage with a new one -- ideally at a lower interest rate, a shorter term, or both. The decision to refinance is fundamentally a math problem: does the total benefit (lower monthly payments or less total interest) exceed the cost (closing costs and resetting your amortization schedule)? The answer depends on three variables: how much your rate drops, how long you plan to stay in the home, and how much the refinance costs.

The break-even calculation

The break-even point is the most important number in any refinance decision. It tells you how many months of reduced payments are required before your savings cover the upfront closing costs. The formula is straightforward: divide your total refinance closing costs by your monthly payment savings. If your closing costs are $6,000 and you save $200 per month, your break-even is 30 months. If you plan to stay in the home longer than 30 months, refinancing makes financial sense. If you plan to sell or move before the break-even, you lose money on the transaction.

Real-world refinance example

Consider a homeowner with a $340,000 remaining balance at 7.5% with 28 years left on her loan. Her current monthly P&I payment is $2,380. If she refinances into a new 30-year loan at 6.75%, her new payment becomes $2,205 -- a savings of $175 per month. Her closing costs total $5,500. Break-even: 5,500 divided by 175 equals 31 months. If she plans to stay in the home more than 31 months, refinancing saves her money. If she extends to a full new 30-year term, she will pay more total interest despite the lower rate -- so she should consider a 28-year or 25-year custom term or make extra payments to avoid restarting the clock.

What refinance closing costs to expect

Refinance closing costs typically run 2 to 5 percent of the loan amount. On a $350,000 loan, that is $7,000 to $17,500. Major costs include the origination fee (0.5 to 1% of the loan), a new appraisal ($400 to $700), title search and title insurance ($500 to $1,500), and prepaid items such as prepaid interest and escrow setup. Some lenders offer no-closing-cost refinances where fees are rolled into a slightly higher rate -- this can make sense if you plan to refinance again or sell relatively soon.

How to use the refinance calculator

Enter your current loan details: remaining balance, current rate, and remaining months. Then enter the new loan terms you are considering: the new rate, term, and estimated closing costs. The calculator produces your monthly savings, your break-even point in months, and your lifetime interest savings if you stay for the full term. Use the verdict banner as a quick read: a break-even under 36 months combined with a plan to stay longer is generally a strong refinance case.

Frequently asked questions

When does refinancing make financial sense?

Refinancing makes sense when your monthly savings exceed the closing costs within the timeframe you plan to stay in the home. Divide your total closing costs by your monthly savings to find your break-even in months. If you plan to stay longer than that, refinancing likely makes financial sense.

What are typical refinance closing costs?

Refinance closing costs typically run 2 to 5% of the loan amount. On a $350,000 loan, expect $7,000 to $17,500 in closing costs. This includes origination fees, appraisal, title insurance, and prepaid items.

What is the difference between rate-and-term and cash-out refinancing?

Rate-and-term refinancing replaces your existing loan with a new one at a lower rate or different term without changing your loan balance. Cash-out refinancing allows you to borrow more than you owe and receive the difference in cash, increasing your loan balance and your monthly payment.

Should I refinance into a 15-year or 30-year loan?

A 15-year refinance will have a lower interest rate and dramatically less total interest, but a significantly higher monthly payment. A 30-year refinance offers the lowest monthly payment but more total interest over time. The right choice depends on your cash flow needs and how long you plan to stay in the home.

Is it worth refinancing with only a few years left on my loan?

Generally no. If you have fewer than 5 to 7 years left on your mortgage, you have already paid the majority of your interest and your principal reduction is accelerating rapidly. Refinancing resets the amortization clock and usually costs more in total than staying with your current loan.

How much does my credit score affect my refinance rate?

Your credit score is one of the primary determinants of your refinance rate. Borrowers with scores of 760 or above typically qualify for the best available rates. A score of 680 versus 760 can mean a rate difference of 0.5 to 1.0%, which on a $350,000 loan translates to roughly $35,000 to $70,000 in additional total interest over 30 years.

Calculations are estimates for educational purposes only and do not constitute financial advice. Consult a licensed mortgage professional before making any refinancing decision.