Refinance Calculator
Compare your current mortgage against a new loan to see monthly savings, the breakeven point, and lifetime interest difference.
Enter your current balance, rate, and remaining term alongside a proposed new rate, term, and closing costs. The calculator shows your new payment, how much you save each month, how many months it takes to recoup closing costs, and the total interest saved over the life of the loan.
How to use this calculator
- Enter your current loan balance, interest rate, and how many years remain on the loan.
- Enter the proposed new rate, new loan term, and estimated closing costs.
- Click Calculate to see your new payment, monthly savings, and breakeven month.
- Compare lifetime interest on the current loan versus the new loan to judge the full benefit.
- Only refinance if you expect to stay in the home past the breakeven point.
The formula
Monthly payment = P × r(1+r)^n / ((1+r)^n − 1); breakeven months = closing costs ÷ monthly savings.
Worked example
Refinancing a $280,000 balance from 7% (27 years remaining) to 6% for 30 years with $6,000 in closing costs lowers the payment from $1,925.88 to $1,678.74 — a $247.14 monthly saving. The $6,000 cost breaks even in about 24.3 months, and lifetime interest drops by $19,638.78.
Frequently Asked Questions
When does refinancing make sense?
Refinancing usually makes sense when the new rate is meaningfully lower than your current rate, you plan to stay in the home past the breakeven point, and the lifetime interest savings exceed the closing costs. A common rule of thumb is a rate drop of at least 0.75 to 1 percentage point, but the breakeven calculation is the real test. If you will sell or move before breakeven, refinancing costs you money.
What is the breakeven point on a refinance?
The breakeven point is the number of months it takes for your monthly savings to add up to what you paid in closing costs. It is calculated as closing costs divided by monthly savings. For example, $6,000 in costs with $247 in monthly savings breaks even in about 24 months. Only savings after that point are true gains.
Should I refinance into a shorter term or keep 30 years?
A shorter term usually carries a lower rate and builds equity much faster, but the monthly payment is higher. Keeping a 30-year term maximizes monthly cash-flow savings, which helps if your goal is lower payments. Compare the lifetime interest difference, not just the monthly payment, to see the full tradeoff.
Are closing costs always worth paying for a lower rate?
Not always. Lenders often offer a slightly higher rate with lender credits that cover closing costs, which can win if you might move or refinance again soon. Run the numbers both ways: upfront costs with a lower rate versus zero costs with a slightly higher rate, and compare breakeven points. The right choice depends on how long you keep the loan.
Does refinancing restart my loan term?
If you refinance a loan with 27 years remaining into a new 30-year loan, you add 3 years of payments, which can erase much of the interest savings from the lower rate. That is why this calculator compares remaining interest on your current loan against total interest on the new loan. Consider matching your remaining term to avoid extending the payoff date.