Mortgage Refinance Calculator
Compare your existing mortgage with a new loan to see exactly how much you could save each month, how much interest you save over the life of the loan, and how long it takes to break even on closing costs.
Disclaimer: This calculator provides estimates for general informational and educational purposes only. It is not financial, lending, tax or legal advice, and it does not guarantee any loan terms, rate, payment or approval. Actual figures depend on your lender, credit, location and the final terms of any loan. Always confirm numbers with a licensed mortgage lender, financial advisor or housing counselor before making a decision.
How the refinance calculator works
Refinancing replaces your current mortgage with a brand-new loan, ideally at a lower interest rate or a term that fits your goals better. To know whether it is worth it, you have to compare three things: your new monthly payment, the total interest you will pay over the life of each loan, and how long it takes the monthly savings to recover the closing costs. This tool does all three at once.
Every mortgage payment is calculated with the standard amortization formula.
For a loan amount P, a monthly rate r (your annual
rate divided by 12) and n total monthly payments, the principal
and interest payment is:
Payment = P × r × (1 + r)n ÷ ((1 + r)n − 1)
The calculator runs that formula on your current balance at your existing rate and remaining term, then runs it again on the new loan. The gap between the two payments is your monthly saving. If you choose to roll closing costs into the loan, those fees are added to the new balance before the new payment is calculated.
A worked example
Say you owe $320,000 at 7.1% with 27 years left, and you can refinance into a new 30-year loan at 6.0% with $4,500 in closing costs:
- Your current payment is about $2,222/month.
- The new payment is about $1,919/month — roughly $303 less.
- Paying $4,500 in costs up front, you break even in about 15 months.
- If you keep the loan well past that point, the refinance comes out ahead.
But notice the catch: restarting at 30 years stretches the balance back out, so the lifetime interest picture can be less rosy than the monthly number suggests. Always read the lifetime-interest rows, not just the payment.
What affects your result
- The rate gap. The bigger the drop between your old and new rate, the bigger the monthly saving. A common rule of thumb is that a drop of 0.5–1.0 percentage points is worth investigating.
- The new term. Resetting to 30 years lowers the payment but can raise total interest. Refinancing into a shorter term (say 15 or 20 years) can save enormous interest even if the payment barely moves.
- Closing costs. Higher costs push your break-even point further out. Ask each lender for a full fee breakdown and watch for points.
- How long you will stay. If you may sell or move before break-even, refinancing can lose money even at a lower rate.
- Mortgage insurance. If refinancing lets you drop PMI, the real-world saving is larger than principal and interest alone.
Watch the term reset. Lowering your rate but restarting the clock at 30 years can increase the total interest you pay, even though the monthly payment falls. Compare a shorter term too.
Frequently asked questions
How does this refinance calculator work?
It rebuilds the monthly principal-and-interest payment on your current balance at your existing rate and remaining term, then does the same for the new loan you are considering. The difference is your monthly saving. It also compares the remaining interest on each loan and divides your closing costs by the monthly saving to find your break-even point.
What is a good reason to refinance?
The most common reasons are to lower your interest rate and payment, to shorten your term so you pay off the home sooner, to switch from an adjustable rate to a fixed rate, or to remove mortgage insurance. A refinance usually makes sense when the monthly saving recovers your closing costs well before you plan to sell or move.
Does a lower interest rate always save money?
Not necessarily. If you restart a 30-year term, a lower rate can still mean paying more total interest because you stretch the balance over more years again. That is why this tool shows lifetime interest, not just the monthly payment — check both before deciding.
What is the break-even point on a refinance?
It is the number of months it takes for your monthly savings to add up to what you paid in closing costs. If your costs are $4,000 and you save $200 a month, you break even in 20 months. If you expect to keep the loan longer than that, refinancing tends to pay off.
Should I roll closing costs into the new loan?
Rolling costs in means no cash out of pocket, but you finance those fees and pay interest on them, and your new payment is slightly higher. Paying costs up front keeps the balance lower. Toggle the "roll costs into the loan" option to compare both outcomes.
Are these numbers exact?
No. The calculator estimates principal and interest only. Your actual payment may also include property taxes, homeowners insurance and any mortgage insurance, and your real rate and costs depend on your lender, credit and location. Always confirm with a lender before deciding.
Related tools
Pair this with the break-even calculator to focus on payback time, the mortgage points calculator to test buying down your rate, the cash-out refinance calculator if you want to tap equity, and the closing cost calculator to estimate your fees. New to refinancing? Read when it is worth refinancing.