Mortgage Refinance Calculator
Enter your current loan details and new rate to see your monthly savings and break-even timeline.
Current Loan
New Loan
Results
New Monthly Payment
$1,724.01
Current payment: $2,069.18
Monthly Savings
$345.17
Break-Even
12 mo
Lifetime Savings
−$3,890
Rate Reduction
1.25%
You'll recoup the $4,000 closing cost in 12 months. If you stay in the home longer, refinancing saves money.
When Does Refinancing Make Sense?
A mortgage refinance replaces your existing loan with a new one, ideally at a lower interest rate or shorter term. The core question is always whether the savings over time outweigh the upfront closing costs — which typically run between 2% and 5% of the loan balance, or $3,000–$6,000 on a $200,000 loan. The break-even point tells you exactly how many months it takes to recoup those costs through lower monthly payments.
A common rule of thumb says refinancing is worth it if you can reduce your rate by at least 1% and plan to stay in the home past the break-even point. But the real math is more nuanced. A 0.5% reduction on a large balance can save more than a 1.5% reduction on a small balance. Dropping from 7.5% to 6.25% on a $280,000 loan cuts your monthly payment by roughly $230 and saves over $50,000 in lifetime interest on a 30-year term — even after rolling in $4,000 of closing costs.
Shortening your term — from 30 years to 15, for example — is a powerful form of refinancing even when rates barely change. You pay more each month but dramatically less in total interest. Many homeowners who refinanced into a 30-year loan years ago now have enough equity and income to step down to a 15-year term at roughly similar monthly payments.
Cash-out refinancing lets you borrow against home equity, but increases your balance and total interest. Use the savings estimate above only for rate-and-term refinances; for cash-out scenarios, compare the cost of the additional principal against alternatives like a HELOC or personal loan.
Frequently Asked Questions
How much does refinancing cost?
Closing costs on a refinance typically run 2–5% of the loan balance — usually $3,000–$8,000 for most homeowners. Common fees include an origination fee (0.5–1% of the loan), appraisal ($400–$700), title insurance ($1,000–$2,000), and prepaid interest and escrow items. Some lenders offer 'no-closing-cost' refinances where fees are rolled into the rate, which raises your rate slightly but eliminates the upfront payment.
How is the break-even point calculated?
The break-even point is the closing cost divided by the monthly payment reduction. If refinancing lowers your payment by $200/month and costs $4,000 in closing fees, you break even in 20 months. After that, every month generates net savings. If you plan to sell or move before that date, refinancing will cost you money overall.
Does refinancing restart the amortization clock?
Yes. If you're 7 years into a 30-year mortgage and refinance into a new 30-year loan, you're back to 30 years of payments. That increases total interest paid even at a lower rate because you're extending the repayment timeline. To avoid this, refinance into a shorter term (e.g., 15 or 20 years), or make extra principal payments on the new loan to match your original payoff date.
Will refinancing hurt my credit score?
Refinancing triggers a hard credit inquiry, which may temporarily lower your score by 5–10 points. Multiple mortgage inquiries within a 14–45 day window (depending on the scoring model) are typically counted as a single inquiry, so shopping multiple lenders in a short period minimizes the impact. Your score usually recovers within a few months.