$1,719.54
$1,458.93
$260.61
23
months
$25,914.52
$307,130.09
$275,215.57
$1,719.54
$1,458.93
$260.61
23
months
$25,914.52
$307,130.09
$275,215.57
The Mortgage Refinance Calculator helps you determine whether refinancing your existing mortgage makes financial sense. Refinancing replaces your current loan with a new one, typically at a lower interest rate, which can reduce your monthly payment and total interest cost — but closing costs must be factored in.
The key question in any refinance decision is the break-even point: how many months of savings does it take to recoup the closing costs? If you plan to stay in the home longer than the break-even period, refinancing is generally worthwhile. Typical closing costs range from 2-5% of the loan amount, or roughly $3,000 to $15,000 on a standard mortgage.
Financial experts generally recommend considering refinancing when you can reduce your rate by at least 0.75-1 percentage point. However, the actual decision depends on your remaining term, loan balance, closing costs, and how long you plan to stay in the home. This calculator performs the complete analysis, comparing your current remaining payments against the new loan to show the net lifetime savings.
When refinancing, you have several options: you can keep a similar term to lower your payment, choose a shorter term to save on interest (with higher payments), or even take cash out (cash-out refinance) for home improvements or debt consolidation. Each option has different implications for your monthly budget and long-term financial health.
Be aware that refinancing resets your amortization schedule. If you are 10 years into a 30-year mortgage and refinance into a new 30-year term, you are extending your total repayment period. Consider refinancing into a 20-year term instead to avoid this trap while still capturing the rate savings.
Both current and new payments use: M = P × [r(1+r)n] / [(1+r)n − 1]
Monthly Savings = Current Payment − New Payment
Break-Even Point = Closing Costs ÷ Monthly Savings (in months)
Net Lifetime Savings = (Current Total Payments) − (New Total Payments) − Closing Costs
Total interest for each scenario = (Monthly Payment × Number of Payments) − Loan Balance.
A positive monthly savings means your new payment is lower. The break-even point tells you when the savings recoup closing costs. Net lifetime savings is the most important number — it accounts for the total cost difference minus closing costs. A negative number means refinancing costs more in the long run.
Inputs
Results
Saving $280/month with break-even in 22 months. Net lifetime savings: ~$36,000.
Inputs
Results
Higher monthly payment but saves ~$163,000 in total interest over the life of the loan.
Consider refinancing when you can lower your rate by 0.75-1% or more, plan to stay in the home past the break-even point, and have good credit. Also consider refinancing to switch from an ARM to a fixed rate.
Closing costs typically range from 2-5% of the loan amount. This includes appraisal fees ($300-600), title insurance, origination fees, and other charges. On a $250,000 loan, expect $5,000-$12,500.
The break-even point is how long it takes for monthly savings to recoup closing costs. If you save $300/month and paid $6,000 in closing costs, break-even is 20 months.
A shorter term (15 or 20 years) has higher monthly payments but dramatically less total interest. If you can afford the higher payment, it is a powerful wealth-building strategy.
Most conventional refinances require a credit score of 620+. FHA Streamline refinances may be easier to qualify for. Lower credit scores mean higher rates, reducing the benefit.
The lender covers closing costs in exchange for a slightly higher interest rate. This can make sense if you plan to sell or refinance again within a few years, avoiding the upfront cost.
There is no legal limit on how many times you can refinance. However, each refinance has closing costs, so frequent refinancing is rarely beneficial unless rates drop significantly each time.
Refinancing involves a hard credit inquiry (small temporary dip) and closing the old account (may briefly affect credit mix). The impact is typically minor and recovers within a few months.
A cash-out refinance replaces your mortgage with a larger loan and you receive the difference as cash. This can be used for home improvements, debt consolidation, or other purposes. Rates are typically slightly higher than rate-and-term refinances.
Rolling closing costs into the loan avoids upfront payment but increases your balance and total interest. It makes break-even faster but increases the lifetime cost. It is generally better to pay closing costs upfront if you can afford it.
Roboculator Team
The Roboculator Team explains calculations, planning tools, and practical formulas in clear language for real-life situations.
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