Refinance Calculator — Is a New Rate Worth It?
Compare your current mortgage payment with a new rate and term: see the new payment, monthly savings, break-even months, and lifetime savings — all in dollars.
Your refinance
Advanced options — current payment, closing costs, points & cash out
Payment entry, closing costs, points and cash out are included with their defaults — open Advanced options to change them.
🔒 All calculations happen in your browser — no data leaves your device.
The comparison
- The default refinance — $300,000 from 7% to 5.5% — saves $416.97 a month and breaks even in 11 months on $4,500 of closing costs.
- Lifetime savings counts everything: here it is $18,389.16 in your favor — a lower rate can still lose if the new term runs much longer.
- Break-even is upfront costs divided by monthly savings, rounded up — sell before that month and the closing costs are never recovered.
Compare your current mortgage payment with a new rate and term: see the new payment, monthly savings, break-even months, and lifetime savings — all in dollars.
Total cost, side by side
The navy bar is everything you would pay if you keep the current loan; the emerald bar is the refinance (new payments plus closing costs and points).
Amortization schedules, side by side
Month by month for both loans at once: the payment, the interest inside it, and the balance left — so you can watch the current loan and the refinance race each other to zero.
| Month | Current — payment | Current — interest | Current — balance | New — payment | New — interest | New — balance |
|---|
Keep exploring
Three companion tools for home loans.
How it works
Three steps from your loans to a verdict.
Describe the current loan
Enter the balance you still owe, your current rate, and how many years remain.
Describe the new loan
Enter the rate you were offered, the new term, the closing costs and any points — plus any cash you want to take out.
Read all three numbers
Monthly savings, break-even months, and lifetime savings — refinancing needs all three to make sense.
The math behind the comparison
Each payment uses the standard amortization formula m = P × r ÷ (1 − (1 + r)−n). Monthly savings is the old payment minus the new one. Break-even is your upfront costs — closing costs plus points — divided by monthly savings, rounded up to a whole month. Lifetime savings compares the full totals: (old payment × remaining months) minus (new payment × new months + closing costs + points). Cash out is added to the new loan before its payment is worked out.
Worked examples:
| Scenario | Calculation | Result |
|---|---|---|
| $300k, 7%/25y remaining → 5.5%/30y, $4,500 closing | 2,120.34 − 1,703.37; 4,500 ÷ 416.97 → 10.79 | Save $416.97/mo · break even in 11 months · lifetime +$18,389.16 |
| $200k, 6.5%/20y remaining → 5%/30y, $3,000 closing | 1,491.15 − 1,073.64 = 417.50; 3,000 ÷ 417.50 → 7.19 | Save $417.50/mo · break even in 8 months |
| $150k, 8%/15y remaining → 8%/15y, $2,000 closing | same payment → savings $0 | No savings — never breaks even |
Go deeper
Read both numbers — break-even and lifetime tell different stories.
Refinancing passes two tests, and failing either one is a reason to walk away:
- Break-even: the month your monthly savings have repaid the upfront costs (closing costs plus any points). If you might sell or move before then, refinancing loses money.
- Lifetime savings: the total over both loans’ full terms. A lower rate can still lose here if the new term is much longer — 30 fresh years of payments can outweigh a cheaper monthly bill.
- Healthy sign: both numbers positive — and you plan to stay well past break-even.
- Warning sign: break-even is short but lifetime is negative — the rate dropped, but the term stretch ate the gain.
The model compares principal-and-interest payments plus upfront costs (closing costs and points) only. It does not include:
- Taxes, insurance, and HOA — usually escrowed separately and unchanged by refinancing.
- PMI — if your new loan still carries private mortgage insurance, add it to both sides.
- Points vs. fees: paying discount points lowers the rate but costs money upfront — enter points in their own field and everything else in closing costs.
- Prepayment penalties on your current loan, if any.
- The term-reset effect: a new 30-year clock restarts amortization; extra principal payments can offset this.
This is an estimate for planning — not financial advice. Compare official Loan Estimates line by line before signing.
Points move the break-even: the same refinance, a longer wait
One point on a $300,000 loan is $3,000 of upfront cost — and seven extra months to break even.
Break-even is upfront costs divided by monthly savings, rounded up. With $4,500 of closing costs, no points and $416.97 of monthly savings, the break-even is 4,500 ÷ 416.97 ≈ 10.79, so month 11. Add one point on a $300,000 loan — $3,000 — and the costs become $7,500, the division becomes 7,500 ÷ 416.97 ≈ 17.99, and the break-even moves to month 18. The point buys a lower rate, which raises the monthly saving; but until that lower rate has had 18 months to work, the refinance has cost more than it saved.
The comparison to run is therefore not rate against rate but total cost against total cost over the time you will actually keep the loan: upfront costs plus every monthly payment, on the old loan and on the new one, over the same horizon. A refinance that breaks even in month 11 is a good deal if you stay three years and a bad one if you move in six months. Points only make sense when the horizon is long enough for the lower rate to repay them — and no live rate is quoted anywhere on this page, because the decision is arithmetic on your own figures, not a market forecast.
Break-even, total cost and the term-reset trap: refinancing explained.
The term reset: a lower payment that costs more
Restarting a 30-year term lowers the payment and lengthens the loan. Both are true at once.
The most expensive way to refinance is also the one that feels best in the first month: replacing a loan with 22 years left by a fresh 30-year loan at a lower rate. The payment falls — the rate is lower and the term is longer — but the borrower has bought eight extra years of payments, and the total interest over the new term can exceed the total remaining on the old loan even at the lower rate. The honest comparison holds the payoff date fixed: price the new loan over the years remaining on the old one, and judge the saving on that like-for-like basis.
Cash-out refinancing is a different transaction wearing the same name. Borrowing extra against the home’s equity raises the balance, usually raises the payment, and converts secured debt into spending money — the break-even question does not apply, because there is no saving to break even against. Rate-and-term refinancing is judged by total cost over a fixed horizon; cash-out is judged by what the extracted money does and whether the larger secured debt is worth it. Keep the two decisions separate, and never let a cash-out’s lower rate disguise its larger balance.
Frequently asked questions
Quick answers about this refinance calculator.
How is the break-even point calculated?
Upfront costs — closing costs plus any points — divided by monthly savings, rounded up to a whole month. With $4,500 in closing, no points, and $416.97 of monthly savings: 4,500 ÷ 416.97 ≈ 10.79, so you break even in month 11.
What does lifetime savings include?
Everything: the full remaining payments on your current loan, versus all payments on the new loan plus closing costs and any points. In the default example that is $636,101.28 − $617,712.12 = $18,389.16 in your favor.
Does a lower rate always save money?
No. A longer new term can cancel the rate gain — 30 fresh years of payments may cost more in total than fewer years at a higher rate. Check the lifetime savings line, not just the monthly payment.
What costs are not included here?
Property taxes, home insurance, HOA fees, PMI, and prepayment penalties. Those sit outside the payment comparison. Discount points are included — enter them in the points field, not in closing costs.
Should I refinance if I might move soon?
Probably not — only if you will stay comfortably past the break-even month. Sell before month 11 in the default example and the closing costs are never recovered.
Is this financial advice?
No. This is an estimate for planning only. Mortgage decisions depend on your finances, taxes, and plans — compare lender Loan Estimates and consider speaking with a qualified financial advisor.
How do discount points change the break-even point?
They raise the upfront costs in the break-even division. With $4,500 of closing costs and $416.97 of monthly savings the break-even is month 11; adding one point ($3,000 on a $300,000 loan) takes costs to $7,500 and pushes break-even to month 18. Points buy a lower rate, which raises the monthly saving — but the refinance must be held past the new break-even before it has saved anything at all.
Can refinancing to a lower rate still cost me more overall?
Yes, when the term resets. Replacing a loan with 22 years left by a fresh 30-year loan lowers the payment but adds eight years of payments, and the total interest over the longer term can exceed what remained on the old loan. Compare total cost over the same horizon — price the new loan over the years remaining on the old one — and judge the saving on that like-for-like basis, not on the monthly payment alone.
Related calculators
More tools for home financing.
Disclaimer
This calculator provides estimates for information only — not financial advice. It compares principal-and-interest payments plus the closing costs you enter; taxes, insurance, PMI, fees, and penalties are excluded. Rates are assumed fixed for the full term. Refinancing decisions depend on your full financial picture — verify with lender Loan Estimates and a qualified advisor.