Mortgage Refinance Calculator

Refinancing replaces your mortgage with a new loan, usually to get a lower rate, change the term or take cash out of your home equity. This calculator compares your current loan with the new one over the time you expect to keep it. It shows the new payment, how long the savings take to cover the closing costs, and whether you come out ahead by the time you sell or refinance again.

It also shows the lifetime cost change: the total of every remaining payment plus closing costs on each loan. A refinance can lower your monthly payment and still cost more overall if it stretches the remaining term, and this figure makes that visible.

Simple break-even = closing costs ÷ monthly payment saving

Net after m months = payments saved + (current balance − new balance) + cash out − costs paid in cash

Both payments come from the standard amortization formula. The simple break-even is quick but can mislead: when you restart a 30-year term, part of the lower payment comes from spreading the balance over more years, not from the lower rate. The second break-even compares what you would owe on each loan at every month as well as what you paid, which gives a fairer picture. If you roll the closing costs into the new loan, they show up in its balance instead of as cash.

Rate drop with a new 30-year term. A $300,000 balance at 7% with 25 years left costs $2,120.34 a month. Refinancing at 6.25% for 30 years with $6,000 of closing costs lowers it to $1,847.15, saving $273.19 a month, with a simple break-even of 22 months. After seven years the refinance is $6,851 ahead, but over the full term it costs $34,873 because of the five extra years of payments.

Same rate, keeping 25 years. Refinancing to 6.25% over 300 months instead gives a payment of $1,979.01, a simple break-even of 43 months and a lifetime saving of $36,399.

Switching to 15 years at 5.75%. The payment rises to $2,491.23, but the remaining interest falls from $336,101 to $148,421.

• You will keep the loan past the break-even. If you might move in two or three years, the closing costs may never be recovered.
• The rate drop is large enough to matter. There is no fixed rule; what counts is whether the savings outweigh the costs over your holding period, which is what this calculator checks.
• You keep the term in check. Choosing a new term close to the time left on your current loan, or making the old payment on the new loan, captures the rate saving without extending the debt.
• You need to remove mortgage insurance or an adjustable rate. Those can be good reasons on their own.

Refinance closing costs often run 2% to 5% of the loan and include appraisal, title and lender fees; your Loan Estimate lists them. A no-closing-cost refinance usually charges a higher rate or adds the costs to the balance, so compare it as an option rather than as free. A cash-out refinance borrows more than you owe; the extra money is not savings, and it usually carries a slightly higher rate than a rate-and-term refinance. To compare paying points for a lower rate, use the mortgage points calculator.