Mortgage Refinance Calculator
Refinance Calculator
The Mortgage Refinance Calculator helps homeowners evaluate whether refinancing their existing mortgage makes financial sense. Refinancing involves replacing your current home loan with a new one, ideally at a lower interest rate, with different terms, or both. While the prospect of lower monthly payments is appealing, refinancing comes with closing costs that must be recovered through monthly savings over time. This calculator performs a detailed comparison between your current loan and a proposed refinance loan.
Refinancing can serve multiple financial goals. The most common reason is to secure a lower interest rate, which reduces monthly payments and total interest costs. Another common strategy is to shorten the loan term, such as refinancing from a 30-year to a 15-year mortgage. This typically increases monthly payments but dramatically reduces total interest paid and builds equity much faster.
Timing is critical when considering a refinance. A good rule of thumb is to consider refinancing when you can lower your rate by at least 0.5 to 1 percentage point. The breakeven period is the key metric: if you plan to sell or move before reaching breakeven, refinancing will cost you money rather than save it.
Enter your current loan balance, interest rate, and remaining term. The calculator estimates your current monthly payment. Enter the proposed new rate, term, and total closing costs. If rolling closing costs into the new loan, adjust the balance accordingly.
Press Calculate to see your current versus new payment, monthly savings, total interest comparison, and breakeven months. For example, a $200,000 balance at 7 percent with 25 years remaining refinanced to 5.5 percent with $6,000 closing costs saves approximately $90 per month and breaks even in about 32 months.
The breakeven period is critical: divide closing costs by monthly savings to get months to breakeven. If you plan to stay beyond that, refinancing makes sense. If you expect to move before then, it likely costs you money.
Monthly payment for a fixed-rate amortizing loan:
Monthly savings from refinancing:
Breakeven period measured in months:
Monthly payment for a $250,000 loan at various rates and terms:
| Rate | 15-Year | 20-Year | 30-Year |
|---|---|---|---|
| 4% | $1,849 | $1,515 | $1,194 |
| 5% | $1,977 | $1,650 | $1,342 |
| 6% | $2,110 | $1,791 | $1,499 |
| 7% | $2,247 | $1,938 | $1,663 |
| 8% | $2,389 | $2,091 | $1,835 |
Shop with at least three to five lenders and compare both rates and closing costs. A slightly higher rate with lower closing costs might be better if you plan to move within a few years. Paying discount points to buy down the rate makes sense if you plan to stay for many years.
Consider the total cost, not just the monthly payment. Extending the loan term can lower payments but increase total interest. Always ask for a loan estimate document from each lender for standardized fee comparison.
This calculator does not consider tax implications of refinancing or prepayment penalties. The analysis assumes you keep the new loan for its full term. If you sell or refinance again, actual interest savings will be less than projected.
- What is the breakeven point?
- When cumulative monthly savings equal total refinancing costs. Divide closing costs by monthly savings. If breakeven is 20 months, stay past that for savings.
- How do I calculate total interest savings?
- Difference between remaining interest on current loan and total interest on new loan. The calculator compares both schedules.
- Is refinancing worth it if I plan to sell soon?
- No, if selling before breakeven point. You would pay more in closing costs than you save in monthly payments.
- What factors affect whether I should refinance?
- Current vs new rate, remaining balance, closing costs, expected time in home, credit score, and monthly cash flow goals.
- How does extending my loan term affect total interest?
- Extending the term lowers monthly payment but can increase total interest despite a lower rate. The calculator shows both scenarios.
- Consumer Financial Protection Bureau. "Should I Refinance My Mortgage?" consumerfinance.gov.
- Freddie Mac. "When Does Refinancing Make Sense?" freddiemac.com.
- Investopedia. "Mortgage Refinancing: How It Works." investopedia.com.
- U.S. Department of Housing and Urban Development. "Refinancing Your Mortgage." hud.gov.
Last updated: May 12, 2026