Refinance Calculator
Compare your current mortgage against a refinance and find the break-even point.
About Refinance Calculator
Refinancing replaces your current mortgage with a new loan, usually at a lower rate. The break-even point is the month when cumulative payment savings equal the closing costs you paid upfront. If you plan to stay in the home beyond that point, refinancing saves money. Resetting to a longer term reduces the monthly payment but can increase total interest paid — check the lifetime comparison when considering a 30-year refi on an existing 20-year loan.
Formula
Break-even months
Break-Even Months = Closing Costs ÷ (Current Payment − New Payment)
- Closing Costs
- Out-of-pocket fees at refinance closing
- Current Payment
- Existing monthly P&I
- New Payment
- New monthly P&I after refinance
Worked example
With the default values below, Refinance Calculator returns Monthly Payment Saving of $321.27. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Current Loan Balanceaccepts 1,000–5,000,000 $
- 300,000 $
- Current Interest Rateaccepts 0–20 %
- 7.25 %
- Years Remaining on Current Loanaccepts 1–40 years
- 25 years
- New Interest Rateaccepts 0–20 %
- 6.25 %
- New Loan Termaccepts 5–40 years
- 30 years
- Closing Costsaccepts 0–100,000 $
- 6,000 $
- Roll Closing Costs into Loan
- No
- Cash-Out Amountaccepts 0–500,000 $
- 0 $
Results
- Monthly Payment Saving
- $321.27
- Break-Even PointHow many months until cumulative savings exceed closing costs.
- 19 months
- Current Payment
- $2,168.42
- New Payment
- $1,847.15
- Rate Reduction
- 1.000%
- Out-of-Pocket Closing Costs
- $6,000
- New Loan Balance
- $300,000
- Current Loan — Total Interest
- $350,526
- New Loan — Total Interest
- $364,975
- Lifetime Interest Savings
- -$8,448
Step by step
- 1Current monthly payment= $2,168.42
- 2New loan balance= $300,000
- 3New monthly payment= $1,847.15
- 4Monthly saving= $321.27
- 5Break-even point= 19 months (1.6 years)
Assumptions and limits
- The result is derived only from the 8 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or compounding frequency into account.
- Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- Estimates assume fixed rates and do not include escrow changes, PMI recalculation or tax deductibility of mortgage interest. Consult a mortgage professional.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Estimates assume fixed rates and do not include escrow changes, PMI recalculation or tax deductibility of mortgage interest. Consult a mortgage professional.
Frequently Asked Questions
What is the break-even point and why does it matter?
The break-even point is when your cumulative monthly savings equal what you paid in closing costs. If you sell or refinance again before that date, you lose money on the deal. If you stay beyond it, every subsequent month is net positive.
Should I roll closing costs into the new loan?
Rolling costs in eliminates the upfront payment but adds to the principal you pay interest on for years. It often makes sense for buyers who are short on cash, but it increases the total cost and slightly raises the monthly payment.
Is it worth refinancing for only a 0.5% rate reduction?
It depends on your balance, term and closing costs. On a $400k loan with $5,000 in closing costs and a 0.5% reduction, the break-even is often under 18 months. Run the numbers for your specific situation.
How does extending the term affect total cost?
Refinancing from a 25-year remaining term to a fresh 30-year term lowers the monthly payment but often increases total interest paid over the life of both loans — even at a lower rate. The 'Lifetime Interest Savings' figure in this calculator accounts for that difference.