About the Mortgage Refinance Calculator
Refinancing replaces your current mortgage with a new one — ideally at a lower rate. Whether it's worth it comes down to the monthly savings versus the closing costs you pay upfront, summarized by the break-even point: how many months until the savings cover those costs. This calculator compares your current loan to a new one and shows the payment savings, break-even, and lifetime interest difference.
How it’s calculated
Current and new payments each use the standard amortizing formula on the remaining balance. Monthly savings = current payment − new payment. Break-even months = closing costs ÷ monthly savings. Lifetime interest savings = total interest on the current loan − total interest on the new loan − closing costs.
Example calculation
A $300,000 balance at 7% with 25 years left costs about $2,120/month. Refinancing to 6% over 30 years drops it to about $1,799 — roughly $321/month saved. With $4,000 in closing costs, you break even in about 13 months.
Frequently asked questions
What is the break-even point?
It's how long it takes for your monthly savings to add up to the closing costs you paid. If you'll keep the home past the break-even point, refinancing generally pays off.
Does a lower rate always save money?
Not always. Resetting to a longer term can lower the payment but increase total interest, and closing costs eat into savings. Check both the monthly savings and the lifetime interest figure.
Should I refinance into a shorter term?
A shorter term usually means a higher payment but far less total interest. If you can afford the payment, it can be a better long-term deal than simply lowering the rate over 30 years.
This calculator provides estimates for educational purposes and should not be considered financial, tax, or legal advice. Your actual figures may vary with lender terms, fees, and market conditions.