Mortgage Refinance Calculator

Break-even point = Total closing costs / Monthly savings from refinancing. Example: refinancing saves $250/month, closing costs are $6,000. Break-even = 6000/250 = 24 months. If you plan to stay in the home longer than that, refinancing makes sense. Sell or move before break-even, and you've lost money on the deal. Include all costs — origination fees, appraisal, title, points, escrow setup. Some lenders offer "no-cost" refinances where costs are baked into a slightly higher rate; the math still applies. The calculator computes break-even with custom closing cost and savings inputs.

Generally worth it when the new rate is at least 0.75-1% lower than your current rate, and you'll stay in the home long enough to recover closing costs. Example: $400,000 mortgage at 7%, refinanced to 6% saves about $260/month. Closing costs of $8,000 break even in 31 months. Other reasons to refinance: switching from ARM to fixed, removing PMI, shortening the loan term, or cash-out for renovations. Run the numbers — don't refinance just because rates dropped. Closing costs and resetting the term can offset rate savings. The calculator shows total lifetime savings.

Closing costs typically run 2-5% of the loan amount — origination fees, appraisal ($500-$700), title insurance, recording fees, escrow setup, and discount points. On a $300,000 refinance, that's $6,000-$15,000. These costs reduce net savings. Example: monthly savings of $200 sounds great, but with $9,000 closing costs, break-even is 45 months. If you sell at year 3, you've actually lost money. Some lenders roll costs into the loan balance — you finance them, increasing total interest paid. Always compute true net savings, not just rate difference. The calculator factors closing costs into break-even and lifetime savings.

Lower rate keeps the same term — lower payment, but you reset the clock. Shorter term (e.g., 30-year to 15-year) usually has a slightly lower rate plus much faster payoff and dramatically lower total interest. Example: $300,000 at 7% for 30 years = $719,000 total paid. Refinance to 15-year at 6% = $456,000 total paid — saves $263,000 in interest. Monthly payment is higher though ($2,532 vs $1,996). If you can afford the higher payment, shorter-term refinance wins long-term. If cash flow is tight, keep the rate cut and longer term. The calculator compares both scenarios.

Savings = (Old monthly payment − New monthly payment) × remaining term, minus closing costs. Example: $400,000 mortgage at 7%, 25 years remaining, monthly payment $2,827. Refinance to 6% over new 25-year term — payment drops to $2,577. Monthly savings $250. Over 25 years, that's $75,000. Subtract $8,000 closing costs = $67,000 net savings. But if you reset to a fresh 30-year term, savings change because of extended timeline. Always compare apples-to-apples. The calculator shows lifetime interest savings and monthly cash flow impact for various refinance scenarios.

Resetting to a new 30-year mortgage extends the timeline — you start over on amortization, paying mostly interest in the early years again. Even at a lower rate, total interest paid can exceed the original loan if you've already been paying for years. Example: 8 years into a 30-year, refinancing back to 30 years adds 8 years of payments. Lower monthly payment helps cash flow, but lifetime interest can balloon. Better option: refinance to a term matching your remaining years (22 years in this case). Most lenders offer custom terms. The calculator highlights this trade-off clearly.

Discount points are upfront fees paid to lower your interest rate — typically 1 point = 1% of loan amount, reducing rate by 0.25%. Example: $300,000 loan, 1 point ($3,000) drops rate from 6.25% to 6%. Monthly savings ~$45. Break-even on points alone = 3000/45 = 67 months. Adds to overall closing costs and break-even. Worth buying points if you'll stay in the home long-term and have cash on hand. Not worth it if break-even is too far out. The calculator factors discount points into refinance break-even and shows whether points pay off.