Mortgage Refinance Calculator
Enter your current loan details and new loan terms to see your monthly payment change, total interest saved, closing cost recovery time, and a side-by-side comparison. The calculator works from either your remaining balance or your original loan amount and shows you exactly when refinancing pays off.
How mortgage refinancing works
Refinancing means replacing your existing mortgage with a new loan, typically to get a lower interest rate, change the loan term, or access home equity. When you refinance, a lender pays off your old loan and issues a new one. You then make payments on the new terms. Most refinances involve closing costs between 2% and 5% of the loan amount, covering the lender's origination fee, appraisal, title search, and legal fees. Because of these upfront costs, refinancing only saves money if you stay in the home long enough for the monthly savings to add up and exceed what you paid to refinance.
Rate-and-term vs. cash-out refinance
A rate-and-term refinance simply swaps your existing mortgage for one with a better rate or different term, without changing the loan balance materially. A cash-out refinance lets you borrow more than you owe, with the difference paid to you in cash - useful for renovations, debt consolidation, or large expenses. Cash-out refinances typically carry slightly higher rates and increase your overall debt, so the lifetime interest cost calculation is especially important.
Understanding the break-even point
The break-even point is the number of months until your accumulated monthly savings equal your upfront refinancing costs. For example, if you pay $5,000 in closing costs and save $200 per month, you break even in 25 months. If you sell or refinance again before that, you lose money on the deal. Most financial advisors suggest refinancing makes sense when the break-even is under 3 years and you expect to stay in the home beyond that point. A longer break-even is not automatically disqualifying if you plan to stay for many years.
Discount points and how they affect your rate
Mortgage points are upfront fees paid to the lender in exchange for a lower interest rate. One point equals 1% of the loan amount and typically reduces your rate by about 0.25 percentage points, though the exact trade-off varies by lender and market conditions. Paying points can make sense if you plan to keep the loan for a long time, because the rate savings compound month after month. If you plan to sell or refinance again soon, it is usually better to take the higher rate with no points and keep the cash.
When does refinancing make sense?
| Rate drop | Break-even (typical) | Verdict |
|---|---|---|
| 2% or more | Under 2 years | Strongly consider refinancing |
| 1-2% | 2-4 years | Usually worthwhile if you stay 5+ years |
| 0.5-1% | 3-6 years | Worthwhile if you stay 7+ years |
| Under 0.5% | Over 6 years | Marginal - compare total cost carefully |
| No rate drop | N/A | Only consider for shorter term or cash-out |
General guidelines based on rate reduction and break-even period. Always factor in how long you plan to stay in the home.
Frequently asked questions
How do I know if I should refinance?
Refinancing tends to make sense when you can lower your rate by at least 0.5-1%, you plan to stay in the home past the break-even point, and your credit score qualifies you for a competitive rate. Run the numbers with this calculator: if total interest saved minus closing costs is positive and you will still own the home when you break even, it is worth pursuing.
What is the break-even point and why does it matter?
The break-even point is the month when your cumulative monthly savings equal the upfront costs of the refinance. Before that point you have spent more than you have saved. After it, every month is net savings. If you plan to sell or move before the break-even, refinancing will cost you money overall even if the monthly payment is lower.
Does refinancing reset my loan term?
Only if you choose a new term longer than your remaining months. If you have 20 years left and refinance into a new 30-year loan, you extend your payoff date by 10 years. To avoid this, consider refinancing into a 15- or 20-year term, which usually carries a lower rate and saves significantly more interest, though the monthly payment rises.
How much do closing costs typically cost?
Closing costs on a refinance usually run 2% to 5% of the loan amount. For a $300,000 loan that is $6,000 to $15,000. The main line items are: origination or underwriting fee (0.5-1%), appraisal ($300-$700), title insurance and search ($1,000-$2,000), recording fees ($50-$500), and prepaid interest or escrow setup. Some lenders offer no-closing-cost refinances, where fees are rolled into the rate or loan balance.
What credit score do I need to refinance?
Conventional refinances typically require a minimum score of 620, but the best rates go to borrowers at 740 or higher. FHA refinances accept scores as low as 580. VA and USDA loans have more flexible requirements but their lenders still set their own minimums. Improving your credit score before applying can meaningfully lower the rate you are offered and reduce the break-even period.