Refinance Calculator
Compare your current mortgage with a new loan and find your refinance break-even point.
A mortgage refinance calculator compares the loan you have now with a possible replacement loan. This one uses your remaining balance, current rate, and years left, then compares them with a new rate, new term, and estimated closing costs. It shows monthly savings or increase, a refinance break-even estimate when payment savings exist, the interest cost of each forward-looking option, and a lifetime change figure that includes closing costs.
That makes it useful for homeowners asking, should I refinance my mortgage, and for anyone who wants a quick refinance break-even calculator. But the output should be read carefully. Lower monthly payments can come from a lower rate, a longer term, or both. Resetting the term can ease cash flow while keeping you in debt longer.
How to use the Refinance Calculator
- Enter your "Current loan balance". This is the remaining principal today, not the original amount you borrowed when you first bought the home.
- Fill in "Current interest rate" and "Years remaining" for the mortgage you already have. Those inputs determine the calculator's estimate of your current monthly payment on the remaining balance.
- Enter the proposed "New interest rate" and "New loan term". The new term matters as much as the rate, because extending repayment can lower the payment even when it changes long-run interest differently.
- Add estimated "Closing costs". These costs are used in the refinance break-even calculation, which divides closing costs by monthly savings when the new payment is lower.
- Read the results in order: start with "Monthly savings", then compare "Current payment" and "New payment", check the "Break-even" row, and finally review the interest and lifetime-change rows so you do not judge the refinance on monthly payment alone.
Formula
Break-even months = Closing costs / Monthly savings
Example: lowering the rate while stretching the term
Suppose your current loan balance is $250,000, your current interest rate is 7.00%, and you have 27 years remaining. You are considering a new 30-year loan at 5.75% with $5,000 in closing costs. With those exact inputs, the calculator shows "Monthly savings" of $260.61, a "Current payment" of $1,719.54, a "New payment" of $1,458.93, a "Break-even" point of 20 months, "Interest, current loan" of $307,130.09, "Interest, new loan" of $275,215.57, and "Lifetime change (incl. costs)" of saves $26,914.52.
The break-even math is straightforward: $5,000 divided by $260.61 is about 19.19 months, and the tool rounds that up to 20 months. The new payment is lower because the refinance combines a lower rate with a fresh 30-year term. Even though the term is longer than the 27 years left on the old loan, the lower rate still reduces the interest charged on the remaining balance enough that the tool reports a net lifetime savings after closing costs.
How to interpret the result
Start by deciding what problem you are trying to solve. If the goal is monthly relief, the main savings figure and break-even row matter most. If the goal is long-run cost reduction, focus more on the interest comparison and on whether the new term keeps you paying longer than you want.
A refinance that resets the clock can look attractive because the payment drops immediately, but part of that improvement may come from spreading repayment over more months. Real monthly savings and longer debt duration can exist at the same time.
The lifetime change row is helpful, but keep its scope in mind. It compares interest on the remaining balance under each option and then adjusts for current closing costs. It does not include sunk costs, taxes, escrow changes, or what you might do with the monthly savings.
Next, you may also find these useful: Mortgage Calculator, Loan Calculator, Auto Loan Calculator.
Assumptions and limitations
- This calculator assumes both loans are fixed-rate mortgages with equal monthly payments over the remaining or new term. It does not model adjustable-rate features, cash-out refinancing, points, or prepayment plans.
- The break-even estimate appears only when the new scheduled payment is lower than the current one. If the refinance raises the payment, the tool correctly reports that there is no payment-based break-even at that level.
- Closing costs are treated as an upfront dollar cost today. The calculator does not model rolling those costs into the new balance, which would change both payment and long-run interest.
- The lifetime comparison measures interest on the remaining balance only and then subtracts today's closing costs. It does not compare the full historical cost of the old mortgage from origination, so it should be read as a forward-looking estimate from this point onward.
Frequently asked questions
What does this refinance break-even calculator tell me?
It estimates how many months of payment savings it would take to recover closing costs. If your payment falls by $200 and closing costs are $4,000, the payment-based break-even is about 20 months.
Should I refinance my mortgage just because the new payment is lower?
Not automatically. A lower payment can come from a lower rate, a longer term, or both. Compare forward-looking interest and your horizon, not just the payment.
Why does resetting the term matter so much?
Because time changes amortization. Starting a fresh 30-year loan after several years of payments can lower the monthly amount, but it may also add years of repayment.
Does the lifetime change number include interest I already paid on my current mortgage?
No. It compares interest from today forward on the remaining balance under the current loan versus the refinance, then adjusts for current closing costs. Past interest already paid is not part of this comparison.
What if the refinance raises my monthly payment but lowers total interest?
That can still be sensible, especially if the new term is shorter. In that case the refinance may not have a payment-based break-even, but it could still reduce long-run borrowing cost.
Are closing costs the only extra expense to consider?
No. They are the explicit fee input here, but real decisions may also involve appraisal charges, title costs, recording fees, escrow adjustments, and the opportunity cost of using cash to close.
Sources and further reading
- Consumer Financial Protection Bureau
- Consumer Financial Protection Bureau: Closing costs
- Freddie Mac My Home
Last reviewed: 2026-10-02. See our editorial policy.
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Estimates only; not financial, tax or legal advice. Confirm figures with your lender or a licensed professional. Full disclaimer