Mortgage Refinance Calculator

How the Refinance Calculator Works

Refinancing replaces your existing mortgage with a new loan, typically at a lower interest rate or shorter term. This mortgage refinance calculator compares both scenarios side by side so you can make an informed decision. It calculates your new monthly payment, determines how much you save each month, and shows the break-even point — the number of months it takes for your monthly savings to offset the closing costs of refinancing.

The calculator uses the standard amortization formula to compute monthly payments for both your current remaining loan and the proposed new loan. It then compares total interest paid over the remaining life of each loan to show your net savings. The break-even analysis is critical because if you plan to move before reaching that point, refinancing may cost you more than it saves.

When Does Refinancing Make Sense?

Refinancing is typically worth considering when you can reduce your interest rate by at least 0.5% to 1%, though even smaller drops can be meaningful on large balances. The general rule of thumb is that refinancing makes sense if you plan to stay in the home past the break-even point. Common reasons to refinance include lowering your monthly payment, shortening your loan term to build equity faster, switching from an adjustable-rate to a fixed-rate mortgage, or eliminating private mortgage insurance (PMI).

Consider total closing costs carefully. Refinance closing costs typically range from 2% to 5% of the loan amount and may include application fees, appraisal costs, title insurance, and origination fees. Some lenders offer no-closing-cost refinances, but they usually compensate by charging a slightly higher interest rate. Factor in how long you plan to stay in the home — if the break-even point is 24 months and you plan to move in 18 months, refinancing would cost you money.

Understanding Your Refinance Results

The side-by-side comparison shows your current loan costs versus the proposed refinance. Monthly savings represent the difference in monthly payments between the two loans. The break-even point tells you exactly when refinancing starts paying off — before that point, you are still recouping closing costs. Total interest saved is the difference in total interest paid over the life of each loan, minus closing costs. A positive number means refinancing saves you money in the long run, while a negative number means you would pay more overall by refinancing. Pay attention to all three metrics together, not just the monthly savings alone.