Refinance Calculator guide
Should you refinance? Enter your current loan, the new rate, and closing costs. You'll get the break-even month, what you save over the years you'll actually stay, and the lifetime savings once a longer term is counted.
The only two questions that matter
Refinancing replaces your mortgage with a new one, ideally at a lower rate. It costs money up front, usually 2% to 5% of the loan in closing costs. So the decision comes down to two numbers: how many months until the monthly savings pay back those costs (the break-even point), and whether you'll keep the new loan longer than that.
Everything else, including the old "refinance when rates drop 1%" rule, is a rough proxy for those two numbers. On a small loan, 1% may never pay back $5,000 of costs. On a large loan, half a point can pay back in two years.
The formulas
Break-even months = total closing costs ÷ (current monthly payment − new monthly payment). Both payments are principal and interest only, since taxes and insurance don't change when you refinance.
Net lifetime savings = all remaining payments on the current loan − (all payments on the new loan + closing costs paid in cash). This is where term matters: restarting a 30-year clock adds years of payments that the simple monthly comparison hides.
The calculator also shows your gain over the years you actually plan to stay, counting payments made plus the balance you'd still owe when you sell or refinance again. That's the most honest version of the answer, because almost nobody keeps a mortgage for all 30 years.
Worked example: 7.25% to 6.0%
You owe $300,000 at 7.25% with 27 years left. Your payment is $2,112.58. Refinance into a new 30-year loan at 6.0% with $6,000 in closing costs and the payment drops to $1,798.65, a savings of $313.93 a month. Break-even: $6,000 ÷ $313.93 = 19.1 months, so you're ahead after 20 payments.
Over your planned 7-year stay, you come out about $18,740 ahead once you count both the payments and the lower balance you'd owe. Over the full life of both loans, you save $30,962, even though the new loan runs three years longer.
Now refinance into a 27-year term at the same 6.0% instead. The payment is $1,871.96, saving $240.63 a month. Break-even stretches to 24.9 months, but lifetime savings jump to about $71,963 because you didn't add three extra years of payments. Lower payment and more total savings pull in opposite directions; the calculator shows both so you can choose on purpose.
Rolling costs into the loan
A no-cash refinance rolls closing costs into the new balance, or takes a slightly higher rate in exchange for lender credits (a "no-closing-cost" refinance). You keep your cash, but you pay interest on those costs for decades or accept a worse rate forever. It's a good trade if you'll likely move or refinance again within a few years, and a bad one if you'll stay a long time. Tick the box in the calculator to compare.
Mistakes that make refinancing a loss
Looking only at the monthly payment. Resetting 27 remaining years to 30 lowers the payment even at the same rate. That isn't savings; it's stretching the debt.
Refinancing right before a move. If you'll sell in 18 months and break-even is 24 months, you lose money.
Forgetting cash-out changes the math. Pulling cash out raises the balance and often the rate. Judge a cash-out refinance against a HELOC or home equity loan, not against your current payment.
Not shopping. Lender quotes for the same borrower on the same day often differ by a quarter point or more, and fees differ by thousands. Get at least three Loan Estimates and compare page 2, the closing cost breakdown.
Ignoring the PMI angle. If your home has appreciated and a refinance takes you under 80% loan-to-value, dropping PMI can be worth more than the rate cut itself.
A quick rule of thumb
If break-even is under 24 months and you'll stay at least five years, refinancing is usually a clear win. Between two and four years, it depends on how sure you are about staying. Beyond four years, the savings are fragile: a job move or another rate drop could erase them.
How we calculate: sources
Frequently asked questions
How do I calculate my refinance break-even point?
Divide total closing costs by your monthly payment savings. $6,000 in costs ÷ $313.93 saved a month = 19.1 months, so you're ahead after 20 payments.
Is it worth refinancing for 1% lower?
Often, but not always. On $300,000 with 27 years left, dropping from 7.25% to 6.0% saves about $314 a month and breaks even in about 19 months on $6,000 of costs. On a small balance, the same 1% may take years to recover the costs.
How much does it cost to refinance a mortgage?
Closing costs typically run 2% to 5% of the loan amount, covering origination, appraisal, title insurance, and recording fees. On a $300,000 loan that's roughly $6,000 to $15,000.
Does refinancing to a new 30-year loan save money?
It lowers the payment, but restarting the clock adds years of payments that can erase the savings. In our example, a 27-year new term at 6.0% saves about $72,000 over the loan's life versus about $31,000 for a new 30-year.
Should I roll closing costs into the loan?
It saves cash now, but you pay interest on those costs for the life of the loan. It makes sense if you expect to move or refinance again within a few years.
How soon can I refinance after buying?
A conventional rate-and-term refinance can often happen right away, though some lenders want 6 months of payments. Cash-out refinances and FHA streamlines usually have seasoning rules of about 6 to 12 months.
Is my data uploaded?
Everything runs in your browser. Nothing you enter is uploaded to a server or stored by us.
Does refinancing hurt my credit?
Temporarily and slightly. Mortgage rate-shopping inquiries within a 14- to 45-day window count as one inquiry in most scoring models, so shop several lenders in a short burst.