Refinance Calculator
Whether refinancing is worth it — the break-even month, the monthly saving, and whether the new term quietly costs more than the better rate saves.
The address carries whatever you changed, so anyone opening it sees these numbers. Nothing is saved on our side.
Break-even point
1 year 1 month
Saving $554 a month repays $6,800 of costs in 1 year 1 month — inside the 7 years you expect to stay.
- $2,549
- $1,995
- $554
- $6,800
- $332,835
- Over the remaining term
- $378,186
- Over the new term
A lower payment, and more interest
This is the most common way a refinance costs money while feeling like a saving.
Your payment falls by $554 a month, and over the life of the loan you pay $45,350 more interest.
You have 22 years left and are taking a 30-year loan, so the clock resets. The payment is lower because it is spread over longer, not only because the rate is better. Setting the new term to 22 years shows what the rate alone is worth.
Over the 7 years you expect to stay
Payments made plus what is still owed at the end — the honest comparison, because the two loans run for different lengths.
- Keeping your current loan
- $495,877
- Refinancing
- $478,050
- Refinancing saves
- $17,828
What term to take
A shorter term raises the payment and cuts the interest sharply. This is usually a bigger decision than the rate you negotiated.
| New term | Payment | Total interest | vs yours |
|---|---|---|---|
| 15 yearsLess interest than keeping your loan | $2,833 | −$208,335 less in total | |
| 20 yearsLess interest than keeping your loan | $2,397 | −$142,954 less in total | |
| 25 yearsLess interest than keeping your loan | $2,149 | −$73,413 less in total | |
| 30 yearsyoursMore interest than keeping your loan | $1,995 | — |
How this calculator works
One division decides it. Two comparisons keep it honest.
saving = current payment − new payment
break-even = closing costs ÷ saving
Both payments come from the standard amortizing-loan formula — the current one from your remaining balance over the months still to run, the new one from the new rate and term.
Because the two loans run for different lengths, comparing their lifetime interest is not a fair comparison on its own. So the page also totals what each path costs over the years you expect to stay — payments made plus the balance still owed at the end. That is the comparison that answers the question you actually asked.
What is assumed
- Both loans are fixed rate and fully amortizing.
- You keep making the scheduled payment rather than paying the saving into the loan.
- No mortgage insurance change, no cash taken out.
- No tax deduction on the interest.
A worked example
$340,000 left at 7.1% with 22 years to run, offered 5.8%. $6,800 of closing costs, paid in cash, expecting to stay 7 more years.
| Current payment | $340,000 at 7.1% over 264 months |
|---|---|
| New payment, 30-year term | $340,000 at 5.8% over 360 months |
| Monthly saving | 2,548.62 − 1,994.96 |
| Break-even | 6,800 ÷ 553.66 |
| Lifetime interest, keeping | Over the remaining 22 years |
| Lifetime interest, refinancing | Over a fresh 30 years |
| Extra interest for the lower payment | 378,186 − 332,835 |
The break-even is 13 months and you are staying 7 years, so this refinance pays for itself comfortably. And it still costs $45,350 more in interest, because 22 years of loan became 30. Both things are true, which is why a calculator that reports only the monthly saving is not enough.
Take a 22-year term instead — matching the years you had left — and the payment falls by $266.18 a month while the lifetime interest falls by $70,270. Same rate, same costs, opposite result. The term is the decision; the rate is only the opportunity.
Questions people ask
It is the month at which the accumulated monthly saving has repaid what the refinance cost you. Before it, you are down on the deal. After it, you are ahead. Since the only thing that gets you past it is time in the house, how long you plan to stay decides a refinance more than the rate does — which is why it is an input here rather than an afterthought.
It is a rule of thumb, and it ignores the two things that actually matter: what the refinance costs and how long you will be there. A 0.5% drop on a large balance with cheap closing costs can be clearly worth it. A 1.5% drop with $9,000 of costs on a house you are selling next year is not. Work out the break-even instead of applying the rule.
Because refinancing into a fresh 30-year term restarts the clock. If you were 8 years into a loan, you are now paying for 38 years in total, and the early years of any mortgage are almost all interest. The lower payment is partly the better rate and partly the longer spread. The calculator shows both figures side by side, and warns you when the payment falls while the lifetime cost rises.
It is the cleanest comparison, because it isolates what the rate alone is worth. On the worked example below, taking a fresh 30-year term saves $554 a month and costs $45,350 more in interest; taking a 22-year term to match the years remaining saves $266 a month and saves $70,270 in interest. Same rate, opposite outcome.
It removes the cash requirement, which is sometimes the deciding factor. It does not make the costs disappear — they are added to the balance and you pay interest on them for the life of the loan. The calculator treats break-even the same either way, because the cost still has to be repaid before you are ahead.
Tax treatment of mortgage interest, cash taken out of the equity, changes to mortgage insurance on the new loan, and anything that is not a fixed rate. Each can move the answer, and none is something a general calculator can know about your situation.
Related calculators
An estimate for planning. It is not a loan offer or a rate quote, and it excludes tax treatment, cash-out proceeds and any change to mortgage insurance on the new loan.