Refinance Calculator
Compare your current loan with a refinance: new payment, monthly savings, break-even on closing costs and points, lifetime savings, cash-out and a year-by-year comparison.
How it works
Payment M = P × r ÷ (1 − (1 + r)^−n) · Monthly savings = current M − new M · Simple break-even = (closing costs + points) ÷ monthly savings · Net gain at month k = interest saved up to k − costs
Both payments use standard amortization: P is the balance, r the monthly rate (annual rate ÷ 12) and n the number of monthly payments left. If you only know the original loan, the calculator rebuilds today’s balance from the original amount, rate, term and the payments already made. The new loan amount is your balance plus any cash out, plus the fees and points if you choose to finance them. Discount points cost 1% of the new loan each. The simple break-even divides the total costs by the monthly savings. That works when the term stays about the same. When you change the term or take cash out, the monthly payment is a poor guide, so the calculator also runs both loans month by month and tracks your net gain: the payment savings plus the difference in balances, minus the costs. That works out to the interest saved minus the costs. The month it turns positive is the interest-saved break-even, and its value at the end of both loans is the lifetime savings. The net gain over the years you expect to keep the loan is the number to decide on, because most people sell or refinance again before the term ends.
Worked example
A $250,000 balance at 7% with 25 years left costs $1,766.95 a month. Refinancing to 5.5% over 30 years drops it to $1,419.47, a saving of $347.48 a month, so $4,000 of closing costs pays back in 12 months ($4,000 ÷ $347.48 = 11.5, rounded up). Counting interest, the costs are covered after payment 13, and after 10 years you are about $27,900 ahead. Over the full 30 years you come out about $15,100 ahead, even after paying 5 more years, because the lower rate saves more interest than the longer term adds. Refinancing to 5.5% over 20 years instead saves only $47.23 a month (a 7-year simple break-even), yet it puts you about $113,400 ahead over the life of the loan because it is paid off 5 years sooner.
Sources: CFPB — How should I use lender credits and points (discount points)? · CFPB — Is there such a thing as a no-cost refinance?
Frequently asked questions
When is refinancing worth it?
When you will keep the new loan well past the break-even point. Look at the net gain over the years you expect to stay, not only the monthly savings. A rate drop of 0.5–1 percentage point is a common rule of thumb, but on a large balance or with low costs a smaller drop can still pay.
Why are there two break-even results?
The simple break-even divides the costs by the monthly savings. The interest-saved break-even runs both loans month by month and also counts the difference in balances. If you keep about the same term they are close. If you stretch the term, the simple version looks better than it is, and if you shorten the term the payment may not drop at all, so the simple version shows no break-even even when the refinance clearly pays off.
Does a longer term really save money?
It lowers the monthly payment but usually raises the lifetime interest, because you pay for more years. The lifetime savings result shows this. To save money overall, refinance to a lower rate without pushing the payoff date out much, or keep paying your old payment on the new loan.
Should I pay discount points?
Points cost 1% of the new loan each and usually lower the rate by a fraction of a point. They pay off only if you keep the loan long enough. Enter the points and the lower rate they buy, then compare the net gain over your time horizon with and without them.
Can I roll closing costs into the loan?
Often yes. Turn on “Add the fees and points to the new loan” to see the effect: nothing is due at closing, but the new balance is higher and you pay interest on the costs. A “no-cost” refinance that trades the fees for a higher rate can be modelled by entering zero costs and the higher rate.
How does a cash-out refinance change the numbers?
The cash you take out is added to the new loan, so the new payment and total interest rise. The calculator counts the cash you receive in the net gain and lifetime figures, so the result shows the true cost of borrowing that cash through your mortgage.
Related calculators
This is an educational estimate, not financial advice. Confirm figures with your lender, advisor or tax professional.