Refinance Calculator
It compares the mortgage you have against the one you are being offered: the new payment, what you save each month, and how many months it takes before the closing costs are paid back.
You would save each month
$271.85
Current payment
$2,025.62
New payment
$1,753.77
Monthly saving
$271.85
New loan amount
$300,000
Break-even
22.1 mo
Lifetime saving
$75,555
What it calculates
It compares the mortgage you have against the one you are being offered: the new payment, what you save each month, and how many months it takes before the closing costs are paid back.
Why it matters
A lower rate is not automatically a better deal. Closing costs have to be recouped, and resetting the clock on a 30-year term can cost more overall even while the monthly payment falls.
Who it's for
Homeowners weighing a refinance offer, anyone whose fixed period is ending, and borrowers checking whether a rate drop is worth acting on.
Formula
- B
- Balance remaining on the current loan
- r₁, r₂
- Current and new monthly interest rates
- C
- Closing costs, paid up front or rolled in
- BE
- Break-even months = C ÷ monthly saving
Worked example
$300,000 remaining at 6.5% over 25 years, refinanced to 5.0% with $6,000 costs
- 1Current payment = $2,025.62
- 2New payment at 5.0% = $1,753.77
- 3Monthly saving = $271.85
- 4Break-even = 6,000 ÷ 271.85
Saves $271.85 a month and breaks even after 22 months
How the refinance calculator works
Both loans are priced with the same annuity formula, so the comparison is like for like. The break-even month is simply the closing costs divided by the monthly saving — pass it and the refinance is ahead, sell or move before it and you have lost money. Rolling the costs into the loan removes the up-front outlay, and with it the break-even point, but you then pay interest on those costs for the whole term.
Both loans are priced with the same annuity formula, so the comparison is like for like. The break-even month is the closing costs divided by the monthly saving — pass it and the refinance is ahead, move before it and you have lost money.
Watch the lifetime figure as well as the monthly one. Refinancing 22 years into a mortgage back onto a fresh 30-year term can raise total interest even at a lower rate.
Common mistakes
- Judging a refinance on the monthly payment alone while quietly extending the term by years.
- Ignoring closing costs, which routinely run to 2–5% of the loan.
- Refinancing shortly before moving, so the break-even month never arrives.
Tips and best practice
- Compare the new loan over your remaining term, not a fresh 30 years, to see the true rate benefit.
- If you plan to move within the break-even period, the refinance loses money however good the rate looks.
- Ask for a no-closing-cost option and compare it against the lower rate with fees.
Frequently asked questions
When is refinancing worth it?
When you will stay past the break-even month — closing costs divided by the monthly saving. A rule of thumb is a rate drop of at least 0.5–1%, but the break-even calculation is what actually settles it.
What is the break-even point on a refinance?
The month at which cumulative monthly savings equal the closing costs you paid. Before that point the refinance has cost you money; after it, everything is saving.
Should I roll the closing costs into the loan?
It removes the up-front cash and the break-even period, but you pay interest on those costs for the entire term. Paying up front is cheaper if you have the cash and plan to stay.
Does refinancing reset my loan term?
Usually yes, unless you choose a shorter term. Refinancing 22 years into a 30-year loan back onto a new 30-year term can raise lifetime interest even at a lower rate.
How much does refinancing cost?
Typically 2–5% of the loan amount, covering appraisal, origination, title and legal fees. On a $300,000 loan that is $6,000–$15,000.
Related calculators
Methodology & trust
- Formula source
- Standard annuity comparison with closing-cost recovery period.
- Last updated
- 2026-07-28
- Privacy
- Every calculation runs in your browser. No inputs are sent to a server or stored.
- Accessibility
- Keyboard navigable, labeled inputs and WCAG AA color contrast.