About the Mortgage Refinance Calculator
This mortgage refinance calculator puts your current loan and a proposed new loan side by side. Enter your remaining balance, current rate and years left, then the new rate, new term and the closing costs the lender quotes. You will see the change in monthly payment, how many months it takes for the savings to repay the closing costs, and whether you come out ahead over the life of both loans.
It is designed for homeowners who have seen rates drop, whose credit has improved, or who want to switch terms — for example from 30 to 15 years to be debt-free sooner. It answers the two questions that matter: how long do I need to stay in the home to break even, and will I actually pay less in total?
Watch the lifetime figure closely. Resetting a loan with 25 years left to a new 30-year term lowers the payment but adds five years of payments, which can wipe out most of the interest savings. The calculator assumes both loans are fixed-rate and that closing costs are paid in cash.
With the default inputs, the monthly savings is $308.02. Change any value above to recalculate instantly.
How to use the mortgage refinance calculator
- 1Enter your remaining balance, current rate and years left from your latest statement.
- 2Enter the new rate and term from a lender quote.
- 3Enter the total closing costs on the Loan Estimate (lender fees, appraisal, title).
- 4Check the break-even month against how long you expect to stay in the home.
- 5Compare lifetime savings — try a shorter new term if the total cost goes up.
Formula and method
Both payments use the standard amortization formula M = P × r(1+r)^n ÷ ((1+r)^n − 1), with the current balance as P. The current payment uses your existing rate and the months you have left (n₁); the new payment uses the new rate and new term (n₂).
The break-even point is how many months of lower payments it takes to earn back the closing costs. Lifetime savings compares every remaining payment on the old loan with every payment on the new loan plus closing costs, so it captures the cost of extending your term. It does not discount future dollars or account for taxes.
- M
- Monthly principal and interest payment
- n₁
- Months left on the current loan
- n₂
- Months in the new loan term
Worked examples
7% to 5.75%, resetting to 30 years
On $250,000 with 25 years left, the payment drops from $1,766.95 to $1,458.93 — $308 a month — so $4,000 of closing costs is recovered in 13 months. But because the new loan runs 30 years, total payments fall by only about $869 after costs.
Refinance into a 15-year loan at 5.5%
The payment rises by about $276 a month, so there is no break-even in the usual sense. In exchange, the loan ends 10 years sooner and you avoid roughly $158,400 in payments over the life of the loan.
$320k at 6.875% with 28 years left, refinance to 6.25%
Saving $178 a month takes 34 months to repay $6,000 of costs. Across both loans you come out about $6,579 ahead — a thin margin that only holds if you stay well past the break-even point.
Frequently asked questions
When does it make sense to refinance?+
Refinancing usually makes sense when you can lower your rate enough that the monthly savings repay the closing costs well before you expect to sell or refinance again. A rate drop of around 0.75–1 percentage point is a common rule of thumb, but the break-even month is the real test.
How much are refinance closing costs?+
They typically run 2%–5% of the loan amount and include lender origination fees, appraisal, title insurance, recording fees and prepaid interest. Your Loan Estimate lists them; compare the "Total closing costs" line across lenders.
What is a no-closing-cost refinance?+
The lender pays or rolls in the closing costs in exchange for a higher rate or a larger loan. It shortens the break-even to zero but usually costs more over time if you keep the loan for many years.
Does refinancing restart my loan?+
Yes. A new loan starts a new amortization schedule. Picking a term equal to your remaining years, or paying your old payment amount on the new loan, avoids stretching out your payoff date.
Can I refinance with less than 20% equity?+
Often yes, but conventional loans above 80% loan-to-value will require PMI again, and FHA streamline or VA IRRRL programs have their own rules. Add any new mortgage insurance to your comparison.
Does refinancing hurt my credit score?+
Applying causes a hard inquiry and the new account lowers your average account age, which may dip your score a few points temporarily. Rate shopping within a short window is generally treated as a single inquiry.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.