Refinance Calculator

Refinancing can save you thousands — but only if you stay in the home long enough to recoup the closing costs. This calculator tells you exactly when you'll break even and how much you'll save over the long run.

What Does This Calculator Do?

It compares your current mortgage to a new refinanced loan. It calculates your monthly savings, total closing costs, break-even point (months), and long-term interest savings.

How to Use This Calculator

1. Enter your current loan balance.
2. Enter your current interest rate and remaining term.
3. Enter the new interest rate you've been offered.
4. Enter the new loan term (e.g., 30 years or 15 years).
5. Enter estimated closing costs (typically 2%–5% of loan amount).
6. Click Calculate to see your break-even point and savings.

Break-Even Formula

Break-Even Months = Total Closing Costs ÷ Monthly Payment Savings

If you plan to stay in the home beyond the break-even point, refinancing likely makes sense.

Example Calculation

Current loan: $280,000 at 7.5%, 25 years remaining → payment $2,073
New loan: $280,000 at 6.25%, 30 years → payment $1,723
Closing costs: $6,000

• Monthly savings: $2,073 − $1,723 = $350/month
• Break-even: $6,000 ÷ $350 = 17 months (~1.5 years)
• If you stay 10 more years: total savings ≈ $42,000 − $6,000 = $36,000

When Does Refinancing Make Sense?

• Your new rate is at least 0.75%–1% lower than your current rate.
• You plan to stay in the home beyond the break-even point.
• You want to switch from an adjustable to a fixed rate for stability.
• You want to shorten your loan term and pay off the home faster.

Common Mistakes to Avoid

• Resetting to a 30-year term — Refinancing from year 10 of a 30-year loan into a new 30-year extends your payoff by 10 years. Opt for a 20-year refi to maintain progress.
• Rolling closing costs into the loan — It feels painless, but you pay interest on them for the life of the loan.
• Ignoring PMI changes — If your equity has grown above 20%, refinancing may let you drop PMI.
• Not shopping multiple lenders — Rate differences of even 0.25% matter significantly over 30 years.

Frequently Asked Questions

How much does refinancing cost?

Typical closing costs are 2%–5% of the loan balance. On a $280,000 loan that's $5,600–$14,000. Some lenders offer "no-closing-cost" refis by rolling costs into the rate instead.

Can I refinance with bad credit?

It's harder but possible. FHA streamline refinances and VA IRRRLs have more lenient credit requirements. You may not get the best rate, so weigh the savings carefully.

How often can I refinance?

There's no legal limit, but most lenders impose a 6-month waiting period after closing. Refinancing repeatedly resets closing costs each time, so run the numbers for each scenario.

Should I refinance to a 15-year term?

A 15-year refi raises your monthly payment but drastically cuts total interest. Use our Mortgage Calculator to compare 15 vs. 30-year payments before deciding.

What is a cash-out refinance?

A cash-out refi replaces your mortgage with a larger loan, and you receive the difference in cash. It's useful for home improvements or debt consolidation, but increases your loan balance and monthly payment.

Conclusion

The math of refinancing is straightforward: if your break-even is 18 months and you plan to stay 10 more years, it's almost certainly worth doing. Use this calculator to run the exact numbers for your situation.

Related: Mortgage Calculator | Mortgage Payoff Calculator | Amortization Calculator | Interest Rate Calculator