What this calculator does
A refinance replaces your current mortgage with a new one, usually at a different rate or term. This calculator compares what you owe on your current loan against a proposed new loan and tells you three things: how much your monthly payment would change, how many months it takes to recover the closing costs (the breakeven), and — most importantly — how much more or less you would pay in total over the life of both loans.
That last figure, the lifetime difference, is the one that catches the most common refinance mistake. Read the section below on term resets before using this tool.
What the inputs mean
- Remaining balance — what you owe today, not your original loan amount. Find this on your most recent mortgage statement.
- Current interest rate — the note rate on your existing loan, not its APR.
- Years remaining — how many years are left on your current loan. If you are 3 years into a 30-year loan, enter 27. This is crucial: the calculator compares your remaining obligation against the proposed new loan, not the original terms.
- New rate and new term — the proposed loan's note rate and length. To see a true like-for-like comparison, set the new term to the years you have left on your current loan. Set it to 30 if you want to see what restarting the clock looks like.
- Closing costs — the fees to originate the new loan. These typically run 2–5% of the loan amount and include origination fees, appraisal, title, and recording. Your lender is required to provide a Loan Estimate within three business days of application, which itemizes these costs.
- Roll closing costs into loan — if checked, the closing costs are added to the new loan principal rather than paid in cash at closing. This eliminates the upfront outlay but means you pay interest on those costs for the full new term.
The term reset: the thing that ruins refinances
If you are 7 years into a 30-year loan and refinance into a new 30-year loan, you have just reset the clock by 7 years. The monthly payment falls, the breakeven looks fast, and total lifetime interest can still rise sharply — because you are now paying for 37 years of a house you financed for 30.
Always read the lifetime-difference figure, not just the breakeven month. A positive lifetime difference means refinancing saves money in total. A negative one means you pay more overall even though the monthly payment is lower. For a true like-for-like comparison, set the new term to the years you have left on your current loan.
Current loan
Roughly how long is left on the current loan. Decimals are fine (e.g., 27.5).
Refinance offer
Typically 2–5% of the loan amount: origination, appraisal, title, recording.
If checked, the new loan amount is the balance plus closing costs, and you pay nothing up front.
Ledger reads
Side by side$0
saved per month with the new loan
- Current payment
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- New payment
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- Breakeven point
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- New loan amount
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- Interest left, current loan
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- Interest, new loan
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How to read this worksheet
A refinance is a trade: you pay closing costs now in exchange for a lower payment, a lower rate, or a different term. The single most useful number is the breakeven point — closing costs divided by monthly savings. If you'll keep the loan (and the house) well past that month, the refinance pays for itself; if you might sell or refinance again before then, it doesn't.
Watch the total interest lines carefully when the new term is longer than what's left on your current loan. Resetting a loan with 27 years remaining back to 30 years lowers the payment partly because you're stretching the debt over more time — which can mean paying more total interest even at a lower rate. That's not automatically wrong (cash flow has value), but the ledger shows it plainly so it's a choice, not a surprise.
One way to get the best of both: refinance to the lower rate, then keep paying your old payment amount. The difference lands on principal every month. Model that on the main calculator using the extra payment field.
Where does the "current payment" figure come from?
For a fixed-rate loan, amortizing your remaining balance at your current rate over the years remaining reproduces your actual principal-and-interest payment. It won't match your bill exactly if your bill includes escrow (taxes and insurance) — compare it against the P&I line on your statement.
Does this include taxes, insurance, or PMI?
No — like the rest of this site, it models principal and interest only. Those costs generally don't change when you refinance (though a refinance can be a chance to drop PMI if your equity has grown — see the PMI guide).
What about "no-cost" refinances?
There's no free version — "no-cost" means the costs are built into a slightly higher rate or rolled into the balance. Use the checkbox above to model rolled-in costs, or enter the lender's no-cost rate with $0 closing costs and compare honestly.
This tool is for general planning purposes only and isn't financial, legal, or lending advice. Rates, fees, and qualification vary by lender — get real quotes before deciding.
When to use this calculator
Rate drop with same term remaining
You have 24 years left on a 7.25% loan. Rates have dropped to 6.5%. Set the new term to 24 years and enter $6,000 in closing costs. Read the breakeven month: if you plan to stay in the house longer than that, the refinance pays. If you might sell in two years, the closing costs may not be recoverable.
Shortening the term to cut interest
You are 5 years into a 30-year loan and want to be mortgage-free sooner. Set the new term to 15 years and compare. The monthly payment will rise but the lifetime interest saving is typically dramatic. This is the refinance that usually wins on total cost, at the price of a higher required payment.
Deciding whether to finance the closing costs
Compare the same refinance with closing costs paid in cash vs. rolled into the loan. The breakeven month changes because there is no upfront outlay when costs are rolled in — but the lifetime-difference line tells you the true cost of financing them: you pay interest on those fees for the entire new term.
Frequently asked questions
What closing costs should I use if I do not have a quote yet?
A rough estimate is 2–3% of the loan balance for a straightforward rate-and-term refinance. For a $350,000 balance that is $7,000–$10,500. Use that range to get a feel for the breakeven before you spend time getting lender quotes. Once you have a Loan Estimate from a lender, use those actual figures.
What does 'breakeven month' mean exactly?
The breakeven month is when the cumulative monthly savings on the new loan equal the closing costs you paid. Before that month, you are still in the hole from the closing costs. After it, each month you hold the loan is net savings. If you sell or refinance again before the breakeven, the closing costs are simply lost.
My new payment is higher but you say I save money overall — how?
This happens when you shorten the term. A 15-year loan has a higher monthly payment than a 30-year at the same rate, but the total interest over 15 years is dramatically less than 30 years. The monthly payment comparison is misleading when the terms differ — the lifetime-difference figure is the honest comparison.
Does this calculator account for the tax deduction on mortgage interest?
No. If you itemize deductions, a lower interest rate reduces your deductible interest, so your after-tax saving is smaller than the pre-tax saving shown here. Points paid on a refinance are generally deducted over the life of the loan rather than all at once in the year paid. A tax adviser can quantify this for your specific situation.
What is a no-closing-cost refinance?
A lender offers a no-closing-cost refinance by either rolling the costs into the loan balance (which this calculator models with the 'roll closing costs' checkbox) or by charging a slightly higher rate and using the premium to cover the costs. In the second case there really are no costs to roll in, but the rate is higher than the market rate. Compare the two by modeling the rolled-in-cost scenario against the higher-rate scenario at zero closing costs.
Sources
This calculator is an educational planning tool. Results are estimates based on the inputs and assumptions described on the methodology page. Nothing here is a loan offer, a rate quote, a pre-qualification, or financial advice. Verify every figure against your lender's official Loan Estimate or Closing Disclosure before making any decision.