Mortgage Refinance Calculator: Break-Even Point and Lifetime Savings
A mortgage refinance calculator compares an existing loan with a proposed new mortgage. It estimates monthly savings, scheduled cost differences, and a simple closing-cost break-even period.
Quick answer
A lower rate does not automatically make refinancing worthwhile. Closing costs, a reset loan term, expected time in the home, and cash taken out can change the result.
At a glance
- What it calculates
- Compare current and refinance mortgage payments, remaining interest, closing costs, and break-even time.
- Who it is for
- US homeowners deciding whether a rate-and-term refinance pays back its closing costs.
- Coverage
- United States (federal rules; state and local rules vary)
- Data and assumptions
- A fixed-rate replacement loan, closing costs paid up front, and no cash-out, PMI change or tax effects.
- Cost
- Free, no signup, calculations run in your browser
- Last reviewed
- 2026-07-09
Calculator
How to use this calculator
- Enter the current payoff balance, rate, and months remaining.
- Enter the proposed rate, term, closing costs, and any cash-out.
- Compare payments, break-even, and scheduled cost.
- Recalculate with costs paid in cash if that is an option.
Explanation
What it is
A mortgage refinance calculator compares an existing loan with a proposed new mortgage. It estimates monthly savings, scheduled cost differences, and a simple closing-cost break-even period.
How it works
The calculator amortizes the current balance under the remaining existing term and under the proposed new rate and term. Closing costs and cash-out are added to the new principal for this comparison.
When to use it
Use it when rates have dropped, your credit has improved, or you are considering removing mortgage insurance or shortening the term.
Limitations
- Cash-out refinances, ARMs and streamline programs are not modelled.
- Appraisal outcomes, escrow re-funding and tax effects are excluded.
- Closing costs vary by lender, state and loan size.
Key terms
- Rate-and-term refinance
- A refinance mainly changing interest rate or repayment term.
- Cash-out refinance
- A new mortgage larger than the current payoff, providing cash to the borrower.
- Closing costs
- Lender, appraisal, title, recording, tax, and other transaction charges.
- Break-even
- The period required for payment savings to recover specified costs.
Formula
The calculator amortizes the current balance under the remaining existing term and under the proposed new rate and term. Closing costs and cash-out are added to the new principal for this comparison.
Worked example
On a $300,000 balance, reducing rate by one percentage point may lower payment, but financing $9,000 of costs and restarting a 30-year term can alter long-term savings.
FAQ
When is refinancing a mortgage worth it?
It may make sense when payment or risk benefits exceed costs and you expect to keep the loan beyond the relevant break-even period.
How much lower should the new mortgage rate be?
There is no universal threshold. Balance, remaining term, costs, tax situation, and how long you keep the loan matter.
Should I roll closing costs into the new loan?
Financing costs preserves cash but increases principal and interest. Compare both cash-paid and financed scenarios.
Why can total cost rise even when my payment falls?
A longer replacement term can spread payments over more years and increase total interest.
Does this include taxes and insurance?
No. It compares principal and interest because property taxes and insurance may continue regardless of lender, although escrow amounts can change.
Common mistakes
- Resetting to a new 30-year term and paying more total interest despite a lower rate.
- Leaving closing costs out of the comparison.
- Rolling costs into the balance without accounting for the interest on them.
- Comparing an advertised rate with your own rate that includes points and fees.
Tips
- Judge the refinance on the break-even month, not the monthly saving alone.
- Compare the new loan against the remaining term of the current loan, not a fresh 30 years.
- Ask for a lender credit option and compare it with paying costs up front.
- Refinance only if you expect to stay past the break-even point.
Sources and editorial review
Educational estimates only; not personalized financial, tax, legal, lending, investment, or insurance advice.