Refinance Calculator
Determine if refinancing your mortgage is financially beneficial. Compare your current monthly payments and interest rates against new loan options to calculate savings and your break-even point.
Calculation Results
Your current monthly principal and interest payment.
Estimated monthly principal and interest payment after refinancing.
The amount you save on your mortgage payment each month.
Total savings over the remaining term of the loan, minus refinance closing costs.
The number of months it will take for your monthly savings to offset the closing costs of the new loan.
How This Calculator Works
To evaluate if refinancing is right for you:
- Enter your current remaining mortgage balance.
- Specify your current interest rate and the years remaining on your current loan term.
- Input the interest rate offered for the refinance and estimate the closing costs (usually 2% to 5% of the loan amount).
The calculator immediately outputs your monthly savings, net lifetime savings, and the break-even month to help you decide if the refinancing makes financial sense.
Formula & Calculations
Both current and new monthly payments are calculated using the standard amortization formula:
Payment = Principal × [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]
Where r is the respective monthly rate and n is the remaining months (Remaining Term in Years × 12).
The monthly savings is the difference between the two payments:
Monthly Savings = Current Payment - New Payment
The break-even point is the number of months required to recoup the refinancing fees:
Break-Even Point (Months) = Closing Costs / Monthly Savings
The net lifetime savings multiplies monthly savings over the remaining term and subtracts the upfront closing costs:
Net Lifetime Savings = (Monthly Savings × n) - Closing Costs
Step-by-Step Calculation Examples
Lowering Rate by 1.25%
Refinancing a $300,000 balance from 7.25% to 6.0% with a remaining term of 25 years and $6,000 in closing costs.
- loan_balance: 300000
- current_rate: 7.25
- remaining_term: 25
- new_rate: 6
- closing_costs: 6000
- current_payment: $2,168.42
- new_payment: $1,932.90
- monthly_savings: $235.52
- lifetime_savings: $64,654.92
- break_even_point: 25.5
Frequently Asked Questions
When does it make sense to refinance?
Generally, refinancing makes sense if you can lower your interest rate by 0.75% to 1% or more, and plan to stay in the home long enough to pass the break-even point where monthly savings offset closing costs.
What are typical closing costs for a refinance?
Refinance closing costs typically range between 2% and 5% of the loan amount. They cover things like loan origination fees, home appraisal, title search/insurance, recording fees, and credit report pulls.
Can I roll closing costs into the loan balance?
Yes, this is known as a "no-cash-out" or "rolled-in" refinance. While it reduces your upfront out-of-pocket costs, it increases your total loan balance and monthly payment, which means you will pay interest on those closing costs over the life of the loan.