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Mortgage Refinance Calculator

Enter your current monthly payment, new estimated payment, and closing costs. See monthly savings, break-even timeline, and 5-year net benefit.

Monthly Savings

Break-Even (months)

Net Savings After 5 Years

How the Mortgage Refinance Calculator Works

Refinancing your mortgage means replacing your current loan with a new one — typically to get a lower interest rate, reduce your monthly payment, or change your loan term. This calculator shows you the three most important numbers: monthly savings, break-even point, and net savings after five years. If you plan to stay in your home longer than the break-even period, refinancing is likely financially beneficial.

Refinance Formulas

Monthly Savings = Current Payment − New Payment

Break-Even Months = Closing Costs ÷ Monthly Savings

5-Year Net Savings = (Monthly Savings × 60) − Closing Costs

Worked Example

  • Current monthly payment: $2,100
  • New monthly payment after refinancing: $1,780
  • Closing costs: $5,400

Results:

  • Monthly Savings: $2,100 − $1,780 = $320/month
  • Break-Even: $5,400 ÷ $320 = 16.9 months (~17 months)
  • 5-Year Net Savings: ($320 × 60) − $5,400 = $13,800

If you plan to stay in your home for at least 17 months, this refinance saves you money. After 5 years, you are ahead by nearly $14,000.

When Does Refinancing Make Sense?

The classic guideline is to refinance if you can reduce your interest rate by at least 1%. However, the real question is whether the monthly savings justify the closing costs within your planned time horizon in the home.

Typical Refinance Closing Costs

Cost ItemTypical Amount
Origination fees0.5–1% of loan amount
Appraisal fee$300–$600
Title insurance$700–$2,000
Recording fees$25–$250
Credit check$25–$50
Total (typical)$2,000–$6,000

Some lenders offer "no-closing-cost" refinancing, which rolls costs into the loan balance or compensates with a slightly higher rate. This can be smart if you plan to sell or refinance again within a few years.

Rate-and-Term vs. Cash-Out Refinance

Rate-and-term refinancing changes your interest rate and/or loan term without extracting equity. This is the most common type, used to lower monthly payments or shorten the payoff timeline.

Cash-out refinancing replaces your mortgage with a larger loan and gives you the difference as cash. Homeowners use this to fund home improvements, consolidate debt, or cover major expenses. Cash-out refinances typically come with slightly higher rates and reset your amortization clock.

How Interest Rates Affect the Decision

Even a 0.5% rate reduction can mean significant savings over the life of a 30-year loan. On a $300,000 balance:

Rate ChangeMonthly Savings10-Year Savings
From 7.0% to 6.5%approx. $102/monthapprox. $12,240
From 7.0% to 6.0%approx. $204/monthapprox. $24,480
From 7.0% to 5.5%approx. $308/monthapprox. $36,960
From 7.0% to 5.0%approx. $412/monthapprox. $49,440

Shortening the Loan Term

Refinancing from a 30-year to a 15-year mortgage dramatically reduces total interest paid — sometimes by $100,000 or more — though it raises the monthly payment. Many homeowners choose a 20-year refinance as a middle ground, balancing payment affordability with faster equity building.

Frequently Asked Questions

How much does it cost to refinance a mortgage?

Closing costs typically run 2–5% of the loan amount, or roughly $4,000–$10,000 on a $200,000 balance. Some no-closing-cost options exist but usually come with a higher rate.

What is a good break-even period?

A break-even of 24 months or less is generally considered excellent. If you plan to stay in your home at least that long, refinancing makes strong financial sense.

Should I refinance to a 15-year or 30-year loan?

A 15-year loan saves far more in interest but has higher monthly payments. Refinancing to a 30-year loan at a lower rate reduces payments but may not save as much interest if the term resets. Compare the total interest paid in each scenario.

Does refinancing hurt my credit score?

Yes, temporarily. A refinance triggers a hard credit inquiry (which drops your score 5–10 points) and creates a new account (which reduces average account age). Most borrowers see their score fully recover within 6–12 months.

When is refinancing a bad idea?

If you plan to move within the break-even period, the closing costs will not be recouped. Also, if you are near the end of your loan term, most of your payments are already going to principal — refinancing resets the amortization and increases early interest payments.

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