Refinance Calculator
Find out if refinancing saves you money and when you break even.
Comparison
This tool is for informational and educational purposes only. It is not a substitute for professional financial, medical, legal, or engineering advice. See Terms of Service.
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This calculator helps you decide whether refinancing your mortgage makes financial sense. Follow these steps:
- Enter your current loan balance. Check your latest mortgage statement for the remaining principal balance.
- Enter your current rate and remaining term. If you took a 30-year loan 3 years ago, your remaining term is 27 years.
- Enter the new rate and term. Use a rate quote from your lender. You can refinance into any standard term.
- Enter closing costs. Typical refinance closing costs range from $3,000 to $6,000. Your lender will provide an estimate.
The calculator shows your monthly savings, total savings over the life of the loan, and the break-even point, which is the number of months until your savings exceed the closing costs. If you plan to stay in the home past the break-even point, refinancing is likely worth it.
About Mortgage Refinancing
Refinancing replaces your current mortgage with a new one, typically at a lower interest rate. The goal is to reduce your monthly payment, shorten your loan term, or both. However, refinancing comes with closing costs that must be recouped through savings.
The key metric is the break-even point. If you plan to sell or move before reaching break-even, refinancing costs more than it saves. A common rule of thumb is that a rate reduction of at least 0.75% to 1% makes refinancing worthwhile, but the actual math depends on your specific numbers.
Frequently Asked Questions
When is refinancing worth it?
Refinancing is worth it when you can recoup the closing costs through monthly savings before you sell or move. Calculate the break-even point: if it is 24 months and you plan to stay for 10 years, refinancing makes sense. If you are moving in 18 months, it does not.
What is the break-even point?
The break-even point is the number of months it takes for your cumulative monthly savings to equal the closing costs of the refinance. After that point, every month of savings is pure benefit.
Should I refinance to a shorter term?
Refinancing to a shorter term (e.g., 30-year to 15-year) increases your monthly payment but dramatically reduces total interest. It is a good strategy if you can comfortably afford the higher payment and want to build equity faster.
How much does it cost to refinance?
Refinancing typically costs 2% to 5% of the loan amount. For a $250,000 loan, expect $5,000 to $12,500 in closing costs including appraisal, title insurance, origination fees, and other charges. Some lenders offer no-cost refinancing with a slightly higher rate.