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Refinance Calculator
Find out how much you could save by refinancing your mortgage, and how long it takes to break even on closing costs.
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Current Monthly Payment
New Monthly Payment
Monthly Savings
Break-Even Point
Calculated in your browser. We never see your numbers.
How to Use This Calculator
Enter your current loan balance, current interest rate, and how many months remain on your loan. Then enter the new rate you have been offered, the new loan term, and the estimated closing costs. Click Calculate Savings to see your current vs. new monthly payment, monthly savings, and how long it will take to break even on your closing costs. If your monthly savings are negative, the refinance does not reduce your payment at the new rate.
Refinance Calculation Formulas
Both monthly payments use the standard mortgage formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments. Monthly Savings = Current Payment − New Payment. The Break-Even Point is the number of months until cumulative savings equal your closing costs: Break-Even = ⌈Closing Costs ÷ Monthly Savings⌉. Total Savings = Monthly Savings × New Term (months) − Closing Costs.
Understanding Your Break-Even Point
The break-even point is the most important number in a refinance decision. It tells you how long you must stay in your home before the refinance pays off. If you plan to sell or move before reaching the break-even point, you will lose money on the transaction. For example, if your break-even is 30 months (2.5 years) and you plan to stay at least 5 years, refinancing is likely a smart financial move. If you are unsure of your timeline, use a conservative estimate.
Factors That Affect Your Refinance Rate
The rate you qualify for depends on several factors: your credit score (scores above 740 typically get the best rates), your loan-to-value ratio (the lower your remaining balance relative to home value, the better), your debt-to-income ratio, and current market conditions. Fixed-rate loans offer stability while adjustable-rate mortgages (ARMs) may start lower but can increase. Shopping multiple lenders can save thousands — even a 0.25% rate difference on a $300,000 loan saves about $50/month or $18,000 over 30 years.
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Frequently Asked Questions
When does it make sense to refinance?
Refinancing generally makes sense when the new interest rate is at least 0.5–1% lower than your current rate, you plan to stay in the home long enough to recoup closing costs (the break-even point), and your credit score qualifies you for a competitive rate. A common rule of thumb is that if you can lower your rate by 1% or more and plan to stay for at least 2–3 years, refinancing is usually worth exploring.
What is the break-even point in refinancing?
The break-even point is the number of months it takes for your monthly savings to equal the closing costs you paid to refinance. For example, if you pay $5,000 in closing costs and save $200 per month, your break-even is 25 months. If you sell or refinance again before reaching the break-even point, you will lose money on the refinance. The calculator above computes this automatically.
What are typical closing costs for a refinance?
Closing costs for a mortgage refinance typically range from 2% to 5% of the loan amount. On a $300,000 refinance, that is $6,000–$15,000. Common costs include origination fees (0.5–1% of loan), appraisal ($300–$700), title insurance ($1,000–$2,000), and recording fees ($50–$200). Some lenders offer 'no-closing-cost' refinances that roll costs into the rate or loan balance, which can be useful if you plan to sell soon.
Should I extend my loan term when refinancing?
Extending your term (e.g., refinancing a 20-year remaining balance into a new 30-year loan) lowers your monthly payment but increases total interest paid over the life of the loan. Shortening the term (e.g., 30-year to 15-year) increases monthly payments but dramatically reduces total interest and builds equity faster. The best choice depends on your cash flow needs versus long-term savings goals. Use the calculator to compare scenarios.
Can I roll closing costs into my refinance loan?
Yes, many lenders allow you to add closing costs to your new loan balance rather than paying them upfront — this is called a 'no-cash-out' or 'cash-in' refinance. While this avoids an immediate expense, it means you are paying interest on your closing costs for the life of the loan. This calculator uses your current balance as the new loan principal for simplicity; factor closing costs into your decision using the break-even analysis.
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