Refinance Calculator
Compare your current mortgage with a refinance: new payment, monthly savings, break-even month, lifetime interest, closing costs paid or rolled in, and cash-out.
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About this toolWhat is the Refinance Calculator?
The Refinance Calculator puts your existing mortgage next to a proposed new one. Enter what you still owe, the current rate and how many years are left, then the new rate, new term, closing costs, discount points and any cash you want to take out. It returns both payments, the monthly saving, the month the refinance pays for itself and the interest each loan will cost from today.
Two break-even figures are shown. The simple one divides costs by the monthly saving, which is what most rules of thumb use. The headline figure also counts the difference in loan balances, because a new 30-year loan pays principal down more slowly than a loan you are halfway through. That stops a longer term from looking like free money.
Charts show your net position month by month and the two balances side by side. Inputs stay in the link so you can send a scenario to a partner or a loan officer.
- Payment comparison using the remaining term of your current loan
- Simple and balance-adjusted break-even months
- Closing costs and points paid up front or rolled into the loan
- Cash-out refinance support
- Net-position and balance charts over the full term
How to use the Refinance Calculator
- Enter the remaining balance, current interest rate and years left on your existing mortgage (from a recent statement).
- Enter the new rate and term you have been quoted.
- Add closing costs and any discount points, and choose whether costs are paid at closing or rolled into the loan.
- If you are taking equity out, enter the cash-out amount.
- Compare the monthly saving, the break-even month and the interest figures, and check the net position chart for when you come out ahead.
Worked examples
A one-point rate drop
Input
300,000 at 7.25% with 27 years left; new 6.25% for 30 years; 5,000 closing costs paid
Output
Payment 2,112.58 to 1,847.15; saves 265.43 a month; break-even 21 months (simple 19)
Interest from here falls from 384,477 to 364,975 even though the new loan runs three years longer. The two-month gap between the break-even figures is the slower principal paydown on the new 30-year loan.
Shorter term instead
Input
Same, but a 20-year new loan
Output
Payment rises 80.20 to 2,192.78; break-even 19 months; 158,208 less interest
The payment goes up slightly, but so much more of it goes to principal that you are ahead after 19 months and save more than half of the remaining interest. Simple break-even cannot show this, because there is no monthly saving to divide by.
Rolling the costs in
Input
Original example with closing costs added to the loan
Output
Payment 1,877.94; break-even 23 months
Nothing is due at closing, but you owe 305,000, so the saving is smaller and break-even takes two months longer.
Background and insight
Refinancing replaces one loan with another, so the costs are real: origination and lender fees, appraisal, title insurance and recording fees, plus any discount points you buy to lower the rate. One point is 1% of the new loan amount. You can pay these at closing or roll them into the new balance, in which case nothing is due but you pay interest on them for years.
The honest comparison is net worth, not payment. Each month the calculator adds up payment savings, subtracts what you paid at closing, adds any cash out received, and adds the gap between what you would still owe on the old loan and what you owe on the new one. The first month that total turns positive is the break-even month. If you sell or refinance again before then, the refinance cost you money.
Resetting the clock matters. Moving 27 remaining years onto a new 30-year term lowers the payment partly by stretching it. In the default example the new loan saves 265 a month yet still costs less interest overall only because the rate drop is a full point; with a smaller drop the lifetime interest can rise even while the payment falls.
Common use cases
Deciding whether a rate drop is worth it
See if the savings cover closing costs before you expect to move.
Comparing lender offers
Run a no-cost offer at a higher rate against a lower rate with points.
Cash-out planning
Check what pulling equity out for a renovation or debt consolidation does to the payment and the total interest.
Shortening the term
Test whether moving from 30 to 15 or 20 years is affordable and how much interest it removes.
Tips and limitations
- Use the break-even month together with how long you realistically expect to keep the home.
- Points make sense only if you will keep the loan well beyond their own break-even. Run the calculator with and without them.
- If you refinance to a longer term, keep paying your old payment amount to keep the payoff date where it was.
- Cash-out is borrowed money at the new rate for the full term. The calculator counts the cash as money you received, so a cash-out refinance may never "break even" in the payment sense.
- Taxes, PMI and escrow changes are not included; compare those separately on the Loan Estimate.
Frequently asked questions
How do I calculate the break-even point on a refinance?
The simple method divides total closing costs by the monthly payment saving: 5,000 ÷ 265.43 is about 19 months. A better method, used for the headline figure here, also counts that the new loan may pay down principal more slowly, and finds the month your combined savings and balance difference repay the costs. In that example it is 21 months.
Is it worth refinancing for 1% lower rate?
Often, if you will stay in the home past the break-even month. A one-point drop on a 300,000 balance saves about 265 a month, and 5,000 of costs are repaid in under two years. A smaller drop or higher costs push break-even out, so check the figure against your plans.
Should I roll closing costs into my refinance?
Rolling costs in keeps cash in your pocket but adds them to the balance at the new rate for the whole term. In the default example it raises the payment by about 31 a month and delays break-even by two months. If you have the cash and plan to stay, paying at closing is cheaper.
Does refinancing to a new 30-year loan cost more interest?
It can. Restarting a 30-year term on a loan with 20 years left stretches the debt by a decade. Unless the rate drop is large, lifetime interest can rise even though the monthly payment falls. The calculator shows both totals so you can see which way it goes.
How does a cash-out refinance affect my payment?
The cash is added to the new loan balance, so the payment and total interest rise. With 40,000 cash out on the default example the new payment is 2,093.44, only about 19 below the current payment, and the loan is 340,000 instead of 300,000.
What counts as refinance closing costs?
Typically lender origination or underwriting fees, appraisal, title search and insurance, recording fees, and any discount points. Prepaid items such as escrow deposits and interest are paid at closing too but are not a cost of the refinance itself; leave them out of the closing cost field.
Is there an in-depth guide to the Refinance Calculator?
Yes. “Mortgage Maths: Payments, PMI, Affordability, Refinancing and APR” covers the background, how it works, common pitfalls and worked examples. Read the full guide.
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