Mortgage Refinance Calculator
Enter your current loan balance and rate alongside a new refinance rate and term to see your monthly savings and how many months it takes for those savings to cover the refinance closing costs.
How the Mortgage Refinance formula works
Comparing two amortized payments on the same balance, then finding the break-even point:
Monthly savings = Current payment − New payment Break-even months = Closing costs / Monthly savings
Step-by-step calculation
- Calculate your current monthly payment using your remaining balance, current rate, and remaining term.
- Calculate a new monthly payment using the same balance at the new rate and term.
- Subtract the new payment from the current payment to find monthly savings.
- Divide closing costs by monthly savings to find how many months it takes to break even on the refinance.
Worked example
A $280,000 balance at 7% with 25 years remaining refinanced to 5.75% over 25 years: monthly payment drops from about $1,979 to about $1,762, saving roughly $217/month. With $4,500 in closing costs, break-even = 4,500/217 ≈ 21 months.
Frequently asked questions
How do I know if refinancing is worth it?
Compare the break-even point against how long you plan to stay in the home — if you'll own the home well beyond the break-even point, the refinance likely saves money overall; if you might sell or move before then, the closing costs may not pay off.
Does refinancing reset my loan term?
Yes, unless you specifically choose a shorter term to match your remaining time — refinancing into a new 30-year loan after already paying down several years of your original mortgage extends your overall payoff timeline, even if the monthly payment drops.