Refinance Calculator

Free refinance calculator that compares your current loan to a new one, showing monthly savings, the break-even month on closing costs, and lifetime interest difference.

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How the refinance calculator works

Refinancing means replacing your current loan with a new one, usually to lower the rate or change the term. This calculator amortizes both loans — your current loan at its remaining term, and the proposed new loan — and surfaces the two numbers that actually decide a refinance: your monthly saving, and how long it takes the savings to cover the closing costs.

break-even (months) = closing costs ÷ monthly saving

If you keep the new loan past its break-even month, the refinance has paid for itself and everything after is savings.

Why a lower rate can still cost more

Here is the trap this calculator is built to expose. If you refinance into a fresh 30-year loan when you only had, say, 27 years left, you restart the clock. A lower rate can reduce your monthly payment while the longer term increases the total interest you pay over the life of the loan. That is why the tool shows the lifetime interest difference (including closing costs) alongside the monthly saving — so you see both effects, not just the friendlier one.

A worked example

On a $250,000 balance at 7% with 27 years left, the payment is about $1,720 a month. Refinancing to 6% over a fresh 30 years drops it to about $1,499 — a saving of roughly $221 a month. With $4,000 in closing costs, you break even in about 18 months. If you plan to stay well beyond that, the refinance is likely worth it; if you might move or refinance again within a year, it may not be.

When refinancing makes sense

You will keep the loan past the break-even month. This is the clearest test.
The rate drop is meaningful. A small drop may not overcome closing costs; a larger one usually does.
You can match or shorten the term. Refinancing into a shorter term captures a lower rate without restarting the clock, though the payment may not fall as much.

Limitations

This tool models principal and interest only. It excludes taxes, insurance, mortgage insurance, and the tax treatment of mortgage interest, and it assumes you keep each loan to term. Use the break-even month as your primary guide, and confirm exact closing costs with your lender. To understand why even small rate differences matter so much, read what 1% more on your mortgage rate actually costs.

Frequently asked questions

When is refinancing worth it?

The clearest test is the break-even point: divide your closing costs by the monthly saving to get the number of months until the refinance pays for itself. If you will keep the loan well past that point, it is usually worth it. This calculator shows that break-even month directly.

Why can a lower rate still cost more overall?

If you refinance into a fresh 30-year loan when you only had, say, 27 years left, you restart the clock. A lower rate can reduce the monthly payment while the longer term increases total interest. We show the lifetime interest difference (including closing costs) so you see both effects.

What counts as closing costs?

Refinance closing costs typically include lender fees, appraisal, title, and recording — often 2–5% of the loan. Enter your estimate so the break-even is realistic.