Mortgage Refinance Calculator
Compare your current loan against a refinance offer: the new payment, how long until closing costs pay for themselves, and what happens to lifetime interest.
Current loan vs. offer
The two numbers that matter (and the one that misleads)
Refinance marketing leads with the monthly payment drop, but the payment is the misleading number. A lower payment can coexist with a higher lifetime cost, because most refinances quietly reset your term — trading 27 remaining years for a fresh 30 means three extra years of interest. The two numbers that actually decide the question are the break-even point (months until monthly savings repay the closing costs) and the lifetime interest change including those costs. This calculator shows both, and warns you when they disagree.
Worked example
The defaults above: $280,000 remaining at 7.25% with 27 years left, refinancing to 6.125% for 30 years with $6,000 in closing costs. The payment falls from about $1,995 to $1,701 — a $294 monthly saving, and break-even on costs in about 21 months. But lifetime interest barely improves, because three years were added back to the clock. Change the new term to 25 years instead: the payment still falls slightly, and lifetime interest drops by tens of thousands. Same rate, radically different outcome — the term is doing the work.
How to use this well
- Match the new term to your remaining term (or shorter) to see the honest rate effect. Many lenders offer custom terms; ask.
- Plan around your timeline. If you might sell before break-even, refinancing loses money no matter how good the rate looks. Our break-even article covers the mistakes that skew this number.
- Watch for costs rolled into the loan. Financing the closing costs means paying interest on them for decades. Enter them here as costs either way — they're real either way.
- Compare P&I only. Taxes and insurance don't change with a refinance, so this tool excludes them deliberately.
Questions people ask
Is the old "refinance if rates drop 1%" rule right?
It's a crude proxy. On a large balance, 0.5% can clear break-even in under two years; on a small balance, even 1.5% may not justify the costs. Run the actual numbers — the rule of thumb exists for people who won't. Five situations where refinancing clearly passes the math are in when does refinancing make sense.
What about a no-closing-cost refinance?
Those costs don't vanish; they're recovered through a higher rate. It can still be a good deal if you'll move or refinance again soon — you're renting the lower payment rather than buying it. Enter $0 costs and the offered (higher) rate to model it honestly.
Should I refinance to pay off other debt?
Cash-out refinancing converts unsecured debt into debt secured by your house, at 30-year length. Sometimes rational, never trivial — compare against just attacking the debt with our debt payoff calculator first.