Refinance Calculator
Find out if refinancing your mortgage makes financial sense. Compare your current loan to a new loan to see monthly savings, break-even point, and lifetime interest saved.
When Does Refinancing Make Sense?
- You can lower your rate by at least 0.5–1%
- You plan to stay past the break-even point
- You want to switch from an ARM to a fixed-rate mortgage
- You need lower monthly payments
Frequently Asked Questions
Refinance closing costs typically range from 2%–5% of the loan amount. On a $250,000 loan that's $5,000–$12,500.
Break-even = closing costs ÷ monthly savings. If closing costs are $4,000 and you save $200/month, break-even is 20 months.
The question refinancing actually asks
Refinancing replaces your existing mortgage with a new one. It is worth doing when the money you save each month outweighs what it costs to set up — and the way to test that is the break-even point.
Example: refinancing saves $180 a month and costs $4,500 to close.
$4,500 ÷ $180 = 25 months
Stay in the home beyond 25 months and you're ahead. Sell or refinance again before then and you've lost money, however attractive the new rate looked.
The trap in the monthly saving
A lower payment is not automatically a saving. If you're 8 years into a 30-year mortgage and refinance into a fresh 30-year term, the payment drops partly because you've stretched the remaining balance over 30 years again instead of 22.
You may pay more total interest despite the lower rate, simply because you're paying for eight extra years.
To compare honestly, either refinance into a term that matches your remaining years, or compare total interest remaining on both loans rather than the monthly figure.
What closing costs include
- Origination or lender fees
- Appraisal
- Title search and title insurance
- Recording and legal fees
- Discount points, if you're buying the rate down
These commonly land somewhere around 2–5% of the loan amount. A "no closing cost" refinance doesn't remove them — it either rolls them into the balance or prices them into a higher rate.
When it tends to make sense
- Rates have fallen meaningfully since you borrowed
- Your credit has improved enough to reprice the loan
- You want to move from an adjustable rate to a fixed one before it adjusts
- You have enough equity to drop mortgage insurance
- You plan to stay well past the break-even point
When it usually doesn't
- You may move within a couple of years
- You're deep into the loan and would restart the term
- The rate improvement is marginal once costs are counted
- You'd be converting unsecured debt into debt secured against your home
For how the underlying payment is built, see How Your Mortgage Payment Is Actually Calculated.