Refinance Calculator
Calculate your potential savings from refinancing your mortgage
How to Use This Refinance Calculator
- Enter your current loan balance (not original amount)
- Input your current interest rate and remaining term
- Specify the new loan rate and term you're considering
- Include estimated closing costs for the refinance
- Click Calculate to see monthly savings and break-even point
Example: Refinancing a $250,000 balance from 6.5% to 5.5% with $5,000 closing costs saves $168/month. You'd break even in 30 months. Over the remaining 25 years, you'd save about $45,000 in interest.
Tip: Compare keeping your current term versus extending to 30 years. The lower payment of a longer term may cost more in total interest.
Why Use a Refinance Calculator?
Refinancing can save thousands, but only if you stay long enough to recoup closing costs and the math favors the new terms.
- Calculate monthly payment reduction from a lower rate
- Determine break-even point for closing costs
- Compare total interest paid under current versus new terms
- Evaluate cash-out refinancing for debt consolidation
- Analyze shortening loan term to pay off faster
- Decide whether rate drops justify refinancing costs
Understanding Your Results
The key metrics help determine if refinancing makes financial sense for your situation.
| Result | Meaning | Action |
|---|---|---|
| Break-even under 24 months | Quick recovery of refinance costs | Refinance if you plan to stay at least 2-3 years beyond break-even |
| Break-even 24-48 months | Moderate recovery time | Refinance if you expect to stay 4-5+ years |
| Break-even over 48 months | Long time to recover costs | Consider waiting for better rates or reducing closing costs |
Meaning: Quick recovery of refinance costs
Action: Refinance if you plan to stay at least 2-3 years beyond break-even
Meaning: Moderate recovery time
Action: Refinance if you expect to stay 4-5+ years
Meaning: Long time to recover costs
Action: Consider waiting for better rates or reducing closing costs
Note: Lifetime savings assume you keep the loan to term. Moving or refinancing again sooner reduces actual savings.
About Refinance Calculator
Formula
Break-Even = Closing Costs / Monthly Savings If closing costs are $6,000 and you save $200/month, break-even is 30 months. Stay longer than this to come out ahead.
Current Standards: General guidance suggests refinancing makes sense when you can reduce your rate by at least 0.5-0.75% and stay 3+ years. Closing costs typically run 2-5% of the loan amount.
Frequently Asked Questions
What rate drop makes refinancing worthwhile?
The old 1% rule is outdated. With today's higher closing costs, focus on break-even time instead. If you can break even in 24 months and plan to stay 5+ years, even a 0.5% drop may justify refinancing. Calculate actual numbers rather than following arbitrary rate thresholds.
Should I extend my term when refinancing?
Extending to a new 30-year term lowers monthly payments but increases total interest paid. If you have 20 years left and refinance to 30 years, you're adding 10 years of payments. Consider keeping your payoff timeline by making extra payments equal to the difference.
What are typical refinance closing costs?
Expect 2-5% of the loan amount. On a $300,000 refinance, that's $6,000-$15,000. Major costs include origination fees (0.5-1%), appraisal ($400-700), title insurance ($1,000-2,000), and recording fees. Some lenders offer no-closing-cost options with slightly higher rates.
Is cash-out refinancing a good idea?
Cash-out refinancing converts home equity to cash but increases your loan balance. It can make sense for high-interest debt consolidation or major home improvements that add value. Avoid using it for consumption spending or if it significantly extends your mortgage timeline.
How many times can I refinance?
Technically unlimited, but each refinance has costs and resets the amortization clock. Some lenders require 6-12 month 'seasoning' between refinances. Consider whether repeated refinancing actually moves you toward your financial goals or just resets your payoff date.