Refinance Calculator

Compare your current mortgage with a refinanced loan to determine potential savings. See your breakeven point and total interest savings over the life of the loan.

Refinance Details

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Typically 2-5% of loan amount

Ready to Calculate

Enter your current and new loan details, then click Calculate to see if refinancing makes sense.

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Pro Tip

Consider the breakeven point carefully. If you plan to move or refinance again before reaching breakeven, the closing costs may outweigh the savings.

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How the Refinance Calculator Works

This refinance calculator compares your current mortgage payment with a new refinanced loan to help you determine if refinancing makes financial sense. It calculates your monthly savings, breakeven point, and total interest savings over the life of the loan.

The calculator factors in closing costs, which are rolled into the new loan balance. This gives you a realistic picture of the true cost of refinancing, including the time it takes to recoup those upfront expenses through lower monthly payments.

Refinancing replaces your existing mortgage with a new one, ideally at a lower interest rate or with better terms. Common reasons include lowering your monthly payment, reducing your interest rate, switching from an adjustable to a fixed rate, or shortening your loan term.

The breakeven point is the most critical metric in a refinance decision. It tells you exactly how many months of lower payments it takes to recover the closing costs. If you plan to stay in your home beyond this point, refinancing is likely beneficial.

Refinance Formula

Monthly Payment Formula

M = P × [r(1+r)n] / [(1+r)n - 1]

Where:

M = Monthly payment

P = Principal loan amount (balance + closing costs for new loan)

r = Monthly interest rate (annual rate / 12)

n = Total number of payments (years x 12)

Example

For a $300,000 balance refinanced from 7% to 6% with $6,000 closing costs:

  • • Current payment at 7% for 25 years: $2,120.44/mo
  • • New loan: $306,000 at 6% for 30 years
  • • New payment: $1,834.63/mo
  • • Monthly savings: $285.81
  • • Breakeven: 6,000 / 285.81 = ~21 months

Frequently Asked Questions

When does refinancing make financial sense?
Refinancing typically makes sense when you can reduce your interest rate by at least 0.5% to 1%, plan to stay in the home past the breakeven point, and the closing costs are reasonable relative to your monthly savings. Use the breakeven months result to see how long it takes to recoup closing costs.
What are typical refinance closing costs?
Refinance closing costs typically range from 2% to 5% of the loan amount. They include appraisal fees, title insurance, origination fees, and other charges. Some lenders offer no-closing-cost refinances, but these usually come with a slightly higher interest rate.
Should I roll closing costs into the new loan?
Rolling closing costs into the new loan increases your loan balance and total interest paid. However, it preserves your cash reserves. This calculator assumes closing costs are rolled into the new loan amount for a complete comparison.
How does the loan term affect refinancing savings?
A shorter term (e.g., 15 years instead of 30) may have higher monthly payments but saves significantly on total interest. A longer term lowers monthly payments but increases total interest. Compare both scenarios to find the right balance.
Can I refinance with bad credit?
While possible, refinancing with lower credit scores usually means higher interest rates. FHA streamline refinances may be available with less stringent credit requirements if you already have an FHA loan.