Financing
Refinance Calculator
A refinance is worth it only if you stay in the loan past the break-even point — and only if the lower payment doesn't quietly cost you more interest over time. This lines up your current loan against the new one and shows both, with every step of the math visible.
Your current loan
The new loan
Informational only, not professional advice. This compares two loans from your own figures — it isn't a loan offer and doesn't include PMI, escrow changes, or the tax treatment of mortgage interest. Confirm terms with your lender.
Methodology
Both payments come from the standard amortization formula (Investopedia: Amortization), applied to the same remaining balance: your current loan over its remaining term at your current rate, and the new loan over its new term at the new rate. The break-even follows the Consumer Financial Protection Bureau's guidance on when refinancing makes sense (CFPB: Owning a home). The calculation:
- Current payment = remaining balance amortized over the years left at the current rate
- New payment = same balance amortized over the new term at the new rate
- Monthly saving = current payment − new payment
- Break-even = closing costs ÷ monthly saving (the months to recoup the costs)
- Interest saved = current loan's remaining interest − new loan's total interest − closing costs
Deriving the current payment from the balance, rate, and years left reproduces the payment you already make — a property of amortization — and lets the same math value the interest still ahead of you on each loan. The break-even and the lifetime-interest figures can point opposite ways; that disagreement is the honest heart of a refinance decision, not a bug.
Assumptions and limitations
- Closing costs are assumed paid separately, not rolled into the loan. For a no-cash or no-closing-cost refinance, raise the new rate to what the lender quotes and set closing costs toward zero.
- Principal and interest only — no PMI, escrow, or the deductibility of mortgage interest, all of which can shift the real comparison.
- The new loan is modeled on your current balance. Cash-out refinances borrow more than the balance and aren't captured here.
- Rates are your inputs, not quotes. The result is only as good as the terms you enter; confirm them in a written loan estimate.
Last reviewed: July 2026
Frequently asked questions
What is the break-even point on a refinance?
It's the number of months of lower payments it takes to recoup what the refinance cost you to close. Divide the closing costs by the monthly saving: $6,000 in costs against a $200/month saving breaks even at 30 months. Before that point you're still recovering the fees; after it, the saving is genuinely yours. The break-even is the single most useful screen for a refinance, because it answers the question that actually matters — will you stay in the loan long enough to come out ahead? If you expect to sell or refinance again before break-even, the deal loses money no matter how much lower the rate looks.
Can a lower rate still cost me more?
Yes, and it's the trap this calculator is built to expose. Refinancing a loan with 22 years left into a fresh 30-year term almost always lowers the monthly payment — you've re-spread the balance over more years — but those extra years of interest can add up to more than you save, even at a lower rate. That's why the tool shows both the monthly saving and the interest saved over the life of the loan, net of closing costs. When they disagree, neither is lying: you save cash flow now and pay more in total. Which matters more depends on how long you'll keep the loan and what you'd do with the monthly difference.
Should I roll closing costs into the new loan?
This calculator assumes you pay closing costs separately, which is what makes the break-even figure clean. Rolling them into the balance (a common 'no-cash' refinance) means you borrow more, so the new payment and lifetime interest both rise, and the true break-even stretches out. A no-closing-cost refinance usually just trades the upfront fee for a slightly higher rate — the cost doesn't vanish, it moves into the rate. If you're comparing that route, raise the new rate to what the lender quotes for it and leave closing costs at zero to see the real trade.
Does a refinance reset my loan payoff?
It can, and that's easy to overlook. Every payment you've made has been chipping away at principal; a new 30-year loan restarts that clock. Even at a lower rate, resetting the term is why the lifetime-interest comparison can turn against you. If your goal is to pay the house off faster rather than lower the monthly bill, refinance into a shorter term — or keep your current term length in the 'new term' field — so you capture the rate improvement without stretching the payoff further out.
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