Mortgage Refinance Calculator
See whether refinancing actually saves you money - the monthly saving, the break-even month, and whether a lower payment is quietly costing you more.
Refinance Calculator
Origination, appraisal, title and recording. Typically 2-5% of the loan.
Monthly saving
$278.08
You break even after 1 year 10 months — that is how long the saving takes to repay $6,000 of closing costs. Anything you stay past that point is genuine saving.
Break-even
1 year 10 months
New payment
$1,842
Interest saved
$77,423
Over the life, after costs
Term change
25 → 25 yrs
Side by side
| Current | Refinanced | |
|---|---|---|
| Rate | 7% | 5.5% |
| Term | 25 yrs | 25 yrs |
| Monthly | $2,120 | $1,842 |
| Interest left | $336,101 | $252,679 |
Is it worth it?
- Monthly saving$278.08
- Cash at closing$6,000
- Break-even1 year 10 months
- Lifetime interest saved$77,423
Rolling costs into the loan removes the break-even period but means borrowing them at the mortgage rate for the whole term. Neither is automatically better: paying cash is cheaper if you stay, and rolling in is cheaper if you leave early.
The link carries the values you entered, so whoever opens it sees the same result. Nothing is stored on our side — the numbers travel in the link itself.
How the refinance calculation works
Refinancing replaces your existing mortgage with a new one. Whether it is worth doing comes down to two numbers, and almost every "should I refinance?" rule of thumb ignores the second.
The break-even month
Closing costs are paid up front; the saving arrives monthly. Divide one by the other:
break-even months = closing costs ÷ monthly saving
On a $300,000 balance at 7% with 25 years left, moving to 5.5% over the same term drops the payment from about $2,120 to $1,842 — a saving of $278 a month. With $6,000 of closing costs, you break even in 22 months. Stay longer than that and you are ahead; sell or refinance again sooner and the deal cost you money.
This is why the old "refinance if you can drop 1%" rule is unreliable. A 1% drop on a small balance may take six years to repay its costs, and a 0.5% drop on a large one can break even in a year.
The trap: a lower payment that costs more
This is the part that catches people. If you have 22 years left and refinance into a new 30-year loan, the payment falls — but partly because the term grew by eight years, not because the loan got cheaper. You can end up paying tens of thousands more in total interest while feeling like you saved money every month.
The calculator above flags this explicitly. If the new loan's lifetime interest exceeds what you have left on the current one, it says so, whatever the monthly figure looks like. Compare at the same remaining term first, then decide separately whether you want to stretch the term for cash-flow reasons.
Rolling the costs in
You can pay closing costs in cash or add them to the loan. Rolling them in removes the break-even period entirely — there is no cash outlay to recover — but you borrow that money at the mortgage rate for the whole term. On $6,000 at 5.5% over 25 years, that is roughly $4,700 of extra interest.
Neither is automatically better. Paying cash wins if you stay for the full term; rolling in wins if you leave early, because you never repay costs you did not pay.
What this calculator does not include
Property taxes, insurance and PMI are unchanged by a refinance, so they are left out — they would appear identically on both sides and only obscure the comparison. It also assumes you keep the new loan to term. If you routinely refinance every few years, closing costs recur and the break-even analysis has to be run each time.
Disclaimer: This calculator provides estimates for informational purposes only and is not financial advice. Your actual rate, taxes, fees, and payment will vary - confirm figures with a licensed lender or financial professional.
Frequently asked questions
How much does my rate need to drop to make refinancing worth it?
There is no single threshold, which is why the common "1% rule" misleads. What matters is the break-even month: closing costs divided by the monthly saving. On a large balance a 0.5% drop can break even inside a year; on a small balance a 1.5% drop might take five. Run your own numbers and compare the break-even against how long you actually expect to stay.
Why does my new payment look lower but cost more overall?
Because the term reset. If you had 22 years left and take a new 30-year loan, you have added eight years of interest. The monthly figure falls because the balance is spread over more payments, not because the loan is cheaper. Compare the total remaining interest on both loans, not just the payments - this calculator shows both and warns when the new loan costs more.
Should I roll the closing costs into the loan or pay cash?
Pay cash if you plan to keep the loan for its full term, because rolling costs in means paying mortgage interest on them for decades. Roll them in if you might move or refinance again within a few years, since you never repay costs you did not hand over. Rolling in also removes the break-even period entirely, which changes the calculation rather than just the cash flow.
What are typical closing costs on a refinance?
Usually 2% to 5% of the loan amount, covering origination or lender fees, appraisal, title search and insurance, credit report, and recording fees. Some lenders advertise a "no-cost" refinance; that almost always means the costs are built into a higher interest rate, which is more expensive over any long holding period. Ask for the Loan Estimate and compare the APR, not the rate.
Does refinancing hurt my credit score?
Slightly and briefly. The application triggers a hard inquiry, worth a few points, and the new account lowers your average account age. Multiple mortgage inquiries within a short shopping window - typically 14 to 45 days depending on the scoring model - count as a single inquiry, so comparing several lenders does not multiply the damage. Scores normally recover within a year of on-time payments.
Can I refinance into a shorter term instead?
Yes, and it is often the better move if you can afford the payment. Moving from a 30-year to a 15-year loan usually gets a lower rate as well as far less total interest, though the monthly payment rises substantially. Enter the shorter term above: the calculator will show a negative monthly saving alongside a large lifetime saving, which is exactly the trade-off you are making.
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