Compare your current mortgage vs a refinance option. Calculate monthly savings, break-even point, and total interest savings. Free refinance calculator with no sign-up needed.
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What is Refinance Calculator?
A refinance calculator helps you determine whether replacing your current mortgage with a new loan makes financial sense. By comparing your current monthly payment against a potential new payment, you can see exactly how much you would save each month, how long it takes to recover closing costs (the break-even point), and the total interest savings over the life of the loan.
Refinancing is one of the most powerful tools homeowners have to reduce their housing costs. Even a rate reduction of 0.5% can save hundreds of dollars per month on a typical mortgage. However, refinancing comes with closing costs that typically range from 2% to 6% of the loan amount. This calculator helps you cut through the noise and see the real numbers — so you can make an informed decision about whether refinancing is right for your situation.
The calculator also lets you specify how long you plan to stay in the home, which is the single most important factor in determining whether refinancing saves you money. If you sell before reaching the break-even point, you lose money on the refinance.
Steps:
Enter your current loan balance, interest rate, and remaining term in years.
Enter the new interest rate and term you are considering.
Enter the estimated closing costs for the refinance.
Optionally, enter how many years you plan to stay in the home.
Review your monthly savings, break-even point, and total interest savings.
Use the mode tabs to analyze savings, break-even, or total cost comparison.
Formula
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P = loan balance, r = monthly interest rate (annual rate ÷ 12), n = total number of payments
Monthly Savings = Current Payment - New Payment
Break-Even Months = Closing Costs / Monthly Savings
Total Interest Savings = (Current Total Remaining Interest) - (New Total Interest + Closing Costs)
Net Savings = (Monthly Savings × Months You Stay) - Closing Costs
Use Cases
Evaluating whether to refinance your current mortgage
Comparing different refinance offers from multiple lenders
Deciding between a shorter term with higher payments vs. lower total interest
Determining if paying discount points makes financial sense
Planning how long you need to stay in your home to benefit from refinancing
Key Benefits
Get accurate refinance comparison results instantly
Save time with automated break-even calculations
Make informed decisions with clear savings data
Free on any device no downloads
Pro Tips
Double-check inputs for accuracy
Run multiple scenarios
Combine with other tools
Common Mistakes to Avoid
Using inaccurate inputs
Ignoring key factors
Misinterpreting outputs
Key Terms Explained
Input: Values you provide
Output: Results computed
Formula: Method used
Result: Calculated answer
Related Concepts
Mortgage Calculator – Calculate your current or potential mortgage payments
Amortization Schedule – See how each payment splits between principal and interest
Break-Even Calculator – Analyze the point where costs equal savings in any scenario
Example
You have a $250,000 mortgage at 6.5% with 25 years remaining. Your current payment is $1,686/month. You find a refinance offer at 5.5% for 30 years with $5,000 in closing costs. Your new payment would be $1,419/month — saving $267/month. Break-even: $5,000 / $267 = 18.7 months. If you stay 10 years, net savings = ($267 × 120) - $5,000 = $27,040. Total interest savings over the full term: $169,640.
Frequently Asked Questions
What is mortgage refinancing?
Mortgage refinancing replaces your existing home loan with a new one, typically at a lower interest rate or different term. The goal is to reduce monthly payments, shorten the loan term, switch from an adjustable to a fixed rate, or tap into home equity. The new loan pays off the old one, and you begin making payments under the new terms.
How do I know if refinancing is worth it?
Use the break-even point: divide your closing costs by your monthly savings. If you plan to stay in the home longer than the break-even period, refinancing saves money. For example, $4,000 in closing costs with $200/month savings means a 20-month break-even. If you stay 5+ years, you save $8,000 net.
What are typical closing costs for refinancing?
Closing costs typically range from 2% to 6% of the loan principal. For a $300,000 loan, expect $6,000 to $18,000 in costs including appraisal fees, title insurance, origination fees, credit report fees, and recording fees. Some lenders offer no-closing-cost refinances but compensate with a slightly higher rate.
Should I refinance to a shorter term?
Refinancing from a 30-year to a 15-year mortgage typically offers a lower interest rate and saves tens of thousands in total interest. However, monthly payments increase significantly. Only choose a shorter term if the higher payment fits your budget and you plan to stay in the home long enough to benefit.
How does refinancing affect my credit score?
Refinancing causes a small, temporary dip in your credit score (typically 5-10 points) due to the hard inquiry and new account. The new loan also resets your average account age. However, if refinancing lowers your payments and you make them on time, your credit score will recover and may improve over time.
What is a no-closing-cost refinance?
A no-closing-cost refinance means the lender covers your closing costs in exchange for a slightly higher interest rate (typically 0.125% to 0.5% higher). This makes sense if you plan to sell or refinance again within a few years, as you avoid upfront costs. Over the long term, the higher rate costs more.
Can I refinance if I have an FHA or VA loan?
Yes. FHA loans can use the FHA Streamline Refinance program, which requires minimal documentation and no appraisal. VA loans offer the Interest Rate Reduction Refinance Loan (IRRRL), also known as a VA streamline refinance. Both programs simplify the process and reduce closing costs compared to conventional refinancing.
How many points should I pay to lower my rate?
Each discount point costs 1% of the loan amount and typically lowers your rate by 0.25%. For a $300,000 loan, one point costs $3,000. Calculate the break-even: if one point saves $50/month, it takes 60 months (5 years) to recoup the cost. Only pay points if you plan to stay beyond the break-even period.
What is the 20% equity rule for refinancing?
Having at least 20% equity in your home helps you avoid private mortgage insurance (PMI) on the new loan and qualifies you for better rates. If your current loan has PMI and refinancing eliminates it (because you now have 20%+ equity), the savings can be substantial — often $100-$300/month.
When is the worst time to refinance?
The worst times to refinance are: when interest rates are rising (lock in a rate first), when you are near the end of your current loan (most interest is already paid), when closing costs exceed potential savings, or when you plan to move within 2-3 years (you won't reach break-even). Also avoid refinancing if your credit score has recently dropped.
Does refinancing reset my loan clock?
Yes, refinancing starts a brand new loan term. If you are 10 years into a 30-year mortgage and refinance into another 30-year loan, you are now 40 years from your original start date. This is why refinancing to a 15-year term can be smart — it keeps your total payoff timeline reasonable while lowering your rate.
