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Mortgage Refinance Calculator
Enter your current loan and the refinance offer. The calculator compares the two loans payment by payment — not just the monthly saving, but the honest break-even: the month when your cumulative savings finally cover the closing costs, counting the fact that a new 30-year loan pays down its balance more slowly at first. Estimates only: principal and interest, fixed rates, no taxes, insurance or PMI.
Estimates only: principal and interest on fixed-rate loans. Taxes, insurance, PMI, and any future rate changes are not included. The comparison assumes you stay in the home for the period above; if you move or refinance again sooner, only the savings up to that point count.
How it works
Both loans use the standard amortization formula: monthly payment M = P · i(1+i)n / ((1+i)n − 1), where P is the balance, i the monthly rate (annual rate ÷ 12) and n the number of payments. The balance after m payments is B = P(1+i)m − M((1+i)m − 1)/i. The honest comparison is the total cost after m months: payments made + balance still owed. The refinance is ahead only when that total is lower than the current loan’s — which is why the break-even is later than closing costs ÷ monthly saving: a new 30-year loan pays its balance down more slowly at first, so part of the monthly saving is offset by owing more later. Closing costs paid up front count in full on day one; rolled into the loan they raise the new balance (and the interest on it). Worked example: $300,000 owed at 7.5% with 25 years left → $2,216.97/month. Refinancing to 6% for 30 years → $1,798.65/month, saving $418.32/month. Closing costs of $6,000 paid up front break even after 17 months (not 14 — the naive $6,000 ÷ $418.32 ignores the slower balance paydown). Stay 10 years and you come out $32,293.99 ahead after the costs. Rolling the $6,000 into the loan instead gives a $1,834.62 payment (saving $382.35/month), a break-even of 18 months, and $28,956.09 ahead after 10 years. Worked example 2 (the trap): refinancing the same $300,000 at the same 7.5% but stretching 25 years to 30 cuts the payment to $2,097.64 — yet total interest rises from $365,092.06 to $455,151.67, and the break-even never comes: even after 60 years you are still behind, because the new balance falls so slowly. A lower payment is not the same as a saving. Estimates only — not financial advice. Your lender’s exact fees, rate lock and payoff figure decide the real numbers.
Frequently asked questions
How is the break-even point calculated?
Month by month: after m months, each loan has cost you its payments so far plus the balance still owed. The break-even is the first month where the new loan's total is lower than the current loan's. That is later than the popular shortcut (closing costs ÷ monthly saving), because a new 30-year loan pays its balance down more slowly at first — part of your monthly saving is offset by owing more later.
Is it better to pay closing costs up front or roll them into the loan?
Paying up front is cheaper in total: rolling $6,000 into the loan means paying interest on it for 30 years. On the worked example, paying up front saves $32,294 over 10 years versus $28,956 rolled in. Rolling in only wins if you cannot afford the cash at closing — then the break-even is later and the total saving smaller, but the monthly saving starts immediately.
Should I refinance to a shorter term instead?
A 15-year refinance usually has a lower rate and far less total interest, but a much higher monthly payment — on $300,000 at 6% it is $2,531.57/month versus $1,798.65 on a 30-year. If you can afford the payment, the shorter term builds equity fast; if not, the 30-year with the same rate still saves monthly. Try both terms above and compare the break-even and the total interest.
What if I move or refinance again before the break-even?
Then the refinance loses money: you paid the closing costs and left before the savings covered them. On the worked example, moving after 1 year leaves you about $1,544 behind. Only refinance if you expect to stay past the break-even — or if the new loan solves another problem (a much shorter term, cash out, removing PMI) that justifies the cost.
Does refinancing reset the clock on my mortgage?
Yes — a new 30-year loan means 30 more years of payments, which is exactly why the total interest can rise even when the rate falls. The calculator's total-interest rows show this: compare them, not just the monthly payment, before deciding.
What is not included?
Property taxes, homeowner's insurance, PMI, HOA fees, and any prepayment penalty on the old loan. The comparison also assumes both loans are fixed-rate and that you make every payment on time. Your lender's Loan Estimate is the authoritative figure for fees.