Refinance Calculator
Calculate refinance savings, new monthly payments, and your break-even point on closing costs to see if refinancing makes sense.
Your current loan
The new loan
Typically 2–5% of the loan
Enables loan-to-value (LTV)
New monthly payment (P&I)
$362/mo lower than now
Break-even
~0.8 years to recoup costs
New loan amount
70% LTV
Is it worth it?
You recoup the $3,500 in closing costs in about 0.8 years. Refinance if you'll keep the loan past then.
Lifetime interest
Refinancing also cuts total remaining interest by about $47,623.
How it works
Refinancing replaces your current mortgage with a new one — usually at a lower rate — and you pay closing costs to do it. The key number is the break-even point: how many months of lower payments it takes to recoup those upfront costs. Refinance if you'll stay in the home past break-even; otherwise the costs outweigh the savings.
Break-even point
Break-even (months) = Closing costs ÷ Monthly savings Monthly savings = old payment − new payment
- Closing costs
- fees to refinance (often 2–5% of the loan)
- Monthly savings
- reduction in your monthly payment
Worked example
- New loan lowers the payment by $200/month
- Closing costs = $4,000
- Break-even = 4,000 ÷ 200
Break-even at 20 months — refinancing pays off if you keep the home longer than that.
Good to know
- A lower rate but a fresh 30-year term can still raise total interest by stretching the loan back out — compare lifetime interest, not just the monthly payment.
- A cash-out refinance borrows extra against your equity; it raises the balance, so weigh the new payment against what you do with the cash.
- Rule of thumb: a rate drop of ~0.75–1% is often enough to be worthwhile, but always check break-even against how long you'll stay.
Related Calculators
Frequently Asked Questions
When is refinancing worth it?
A common guideline is a rate reduction of at least 0.75-1 percentage point, but the real test is whether you'll keep the loan past the break-even point on closing costs. Shorter remaining terms and small balances make refinancing harder to justify.
How do I calculate my refinance break-even point?
Divide total closing costs by your monthly payment savings. If refinancing costs $6,000 and saves $200 a month, you break even in 30 months — only refinance if you'll keep the home longer than that.
What does it cost to refinance?
Typically 2-5% of the loan amount, covering origination fees, appraisal, title insurance, and recording. Some lenders offer 'no-cost' refinances that roll fees into the rate or balance instead.
Does refinancing restart my mortgage clock?
Yes — a new 30-year loan resets amortization, which can add years of interest even at a lower rate. Compare total remaining cost, or choose a term matching your remaining years (like a 20- or 15-year loan).
What is a cash-out refinance?
You take a new loan larger than your current balance and pocket the difference from your equity. Rates run slightly higher than rate-and-term refinances, and most lenders cap the new loan around 80% of the home's value.