Real Estate & Investing
Refinance Calculator
Compare your current mortgage with a proposed refinance to see the monthly saving, the break-even point on closing costs, and the interest difference.
Calculation inputs
Enter your existing loan details alongside the proposed terms.
Results
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Complete the fields and select Calculate to show results here.
About this calculator
This calculator compares your current mortgage against a proposed refinance to show the monthly savings, the break-even point on closing costs, and the difference in total interest paid. It is built for homeowners deciding whether a refinance at a new rate or term is worth the upfront cost.
How the calculation works
- New payment = amortized payment on the current balance at the new rate and term
- Monthly savings = current payment − new payment
- Break-even months = closing costs ÷ monthly savings
- Total interest saved = remaining interest on current loan − interest on new loan
Notes and assumptions
Extending the term lowers the payment but can raise lifetime interest even at a lower rate.
Remaining months on the current loan are derived from the balance, rate, and payment you enter.
How it works in plain English
The tool first estimates how many months remain on your current loan, based on the balance, current rate, and current payment, then calculates the interest still owed if you kept that loan to payoff. It then calculates the amortized payment on a new loan for the same balance at the new rate and term.
Monthly savings is simply the current payment minus the new payment. The break-even point divides the closing costs by that monthly savings, showing how many months it takes for the savings to cover the cost of refinancing. If the new payment is not lower, there is no break-even point to calculate.
Finally, the calculator compares total interest remaining on the current loan against total interest on the new loan to estimate interest saved over the life of the loan. Extending the loan term as part of a refinance can lower the monthly payment while still increasing total interest paid, so both figures matter together.
The formula
- New payment = amortized payment on the current balance at the new rate and term
- Monthly savings = current payment - new payment
- Break-even months = closing costs / monthly savings
- Total interest saved = remaining interest on current loan - interest on new loan
Worked example
A homeowner has a $280,000 balance at 7.25%, paying $2,100 a month, and is offered a refinance to 5.75% over a new 30-year term with $6,500 in closing costs. The new monthly payment comes to about $1,634.05, a monthly savings of roughly $465.95.
Dividing the $6,500 closing cost by the $465.95 savings gives a break-even point of about 14 months. If the homeowner expects to stay in the home well beyond that point, the refinance likely pays off; the calculator also compares total remaining interest on both loans to show the longer-term impact.
Frequently asked questions
What counts as closing costs in a refinance?
Refinance closing costs typically include the lender's origination fee, appraisal fee, title insurance, recording fees, and sometimes points paid to lower the interest rate. These vary by lender and loan size, so it's worth requesting a loan estimate to get an accurate figure for this input.
What is a good break-even period for a refinance?
There's no fixed standard, but many homeowners look for a break-even point well within the time they expect to keep the property. If you might sell or refinance again before reaching the break-even month, the closing costs may not be fully recovered through monthly savings.
Can extending the loan term hurt me even with a lower rate?
Yes. Resetting to a new 30-year term after already paying down several years of a loan can lower the monthly payment while increasing total interest paid over time, because you're financing the balance over more months again. Comparing total interest, not just the payment, avoids this trap.
How is the remaining term on my current loan estimated?
The calculator works backward from your current balance, interest rate, and payment amount to estimate how many months are left until the loan is paid off. This is an approximation and may differ slightly from your official amortization schedule if extra payments have been made.
Does this calculator account for cash-out refinancing?
Not directly. It assumes the new loan simply replaces the current balance at a new rate and term. If you're taking cash out, add that amount to the balance being refinanced before entering it, since a larger loan amount will change the new payment and break-even calculations.
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