Refinance Calculator

🔴 Current Loan (Existing Mortgage)

Current Loan Balance

Current Interest Rate

Remaining Term (months)

Current Monthly Payment

🟢 New Loan (Refinance Offer)

New Interest Rate

New Loan Term (months)

Closing Costs & Fees

Origination Fee

Appraisal Fee

Title & Other Fees

Points Paid (1 pt = 1% of loan)

Cash-Out Amount (if any)

How Long Will You Stay? (months)

️ Disclaimer: Estimates only. Consult a licensed mortgage advisor before refinancing.

Side-by-Side Loan Comparison

Metric	🔴 Current Loan	🟢 New Loan	Difference
Run the calculator first to see comparison.

How Refinance Calculator Works

Monthly Mortgage Payment Formula

M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1] Where: M = Monthly payment P = Principal (loan balance) r = Monthly interest rate (annual rate ÷ 12) n = Number of monthly payments (term in months) Example: $350,000 at 6.5% for 30 years r = 6.5% ÷ 12 = 0.5417% n = 360 months M = $350,000 × [0.005417 × 1.005417³⁶⁰] ÷ [1.005417³⁶⁰ − 1] M = $2,212.24/month

Break-Even Point

Break-Even Months = Total Closing Costs ÷ Monthly Savings Example: Closing Costs = $5,500 Monthly Saving = $200 Break-Even = $5,500 ÷ $200 = 27.5 months (~2.3 years) If you plan to stay longer than 27.5 months Refinance! If you plan to move sooner Probably not worth it.

Total Interest Calculation

Total Interest = (Monthly Payment × Term Months) − Principal Current loan total interest = (M_cur × n_cur) − Balance New loan total interest = (M_new × n_new) − Balance Interest Saved = Current Total Interest − New Total Interest Net Benefit = Interest Saved − Closing Costs

When to Refinance - Rules of Thumb

Refinance if: New rate is at least 0.5–1% lower You'll stay in the home past break-even point You want to shorten loan term (15yr vs 30yr) You want to switch ARM Fixed rate You need cash-out for home improvements Avoid refinancing if: Moving soon (before break-even) Resetting to a longer term (e.g. 30yr again) despite lower rate - may pay more total interest Closing costs too high vs savings Credit score has dropped significantly

Closing Costs Explained

Typical refinance closing costs: 2–5% of loan balance Common fees: Origination fee: 0.5–1% of loan Appraisal: $300–$700 Title search/ins: $700–$1,500 Recording fees: $100–$500 Points (optional): 1% of loan per point (lowers interest rate) No-closing-cost refi: Costs rolled into rate or balance Higher rate but no upfront payment Makes sense if staying short-term

Frequently Asked Questions

Refinancing means replacing your existing mortgage with a new loan - usually to get a lower interest rate, reduce monthly payments, shorten the loan term, or access home equity (cash-out refinance). You pay closing costs to get the new loan. Refinancing makes sense when the monthly savings from the new loan recoup those closing costs before you sell or pay off the home.

Break-even point = Total Closing Costs ÷ Monthly Savings. If you pay $8,000 in closing costs and save $200/month, break-even = 40 months. If you plan to stay in the home more than 40 months, refinancing saves money. If you're moving in 2 years (24 months), you'd still be $3,200 in the hole. The break-even is the single most important number in any refinance decision - it tells you exactly when the savings begin to outweigh the costs.

Ignore the 1% rule - what matters is the break-even analysis. On a large loan balance ($400K+), even a 0.5% rate drop can save $200/month and break even in under 2 years. On a small remaining balance ($100K, 5 years left), even a 2% rate drop may not justify closing costs. Run the numbers with your specific loan balance, closing costs, and how long you plan to stay. That is the only reliable answer.

Closing costs for refinancing are typically 2–5% of the loan balance. Common components: origination fee (0.5–1% of loan), appraisal ($300–$700), title search and insurance ($700–$1,500), recording and government fees ($100–$500), prepaid items (initial insurance and tax escrow). Lenders are legally required to provide a Loan Estimate (LE) within 3 business days of application. Get LEs from at least 2–3 lenders and compare total closing costs alongside the rate.

Discount points are prepaid interest - 1 point = 1% of the loan amount paid at closing, typically reducing the interest rate by 0.125–0.25% (varies by lender). Break-even for points is the same analysis: if 1 point costs $4,000 and saves $60/month, break-even = 67 months. Worth buying if staying 6+ years. Not worth buying if rates might fall further or you plan to move sooner. Enter points in the calculator to see the combined break-even including both closing costs and points.

A cash-out refinance replaces your mortgage with a larger loan and gives you the difference in cash. Example: outstanding balance $300,000, refinance for $350,000, receive $50,000 cash. Uses: home improvements (which may increase home value), debt consolidation (replacing high-interest credit card debt with lower mortgage rate), large expense funding. Risk: increases your loan balance, extends your debt timeline, and uses your home as collateral. Makes most sense for investments that generate a return greater than the mortgage rate.

A 15-year mortgage has a lower interest rate (typically 0.5–0.75% below 30-year) but a significantly higher monthly payment. On a $400,000 loan: 30-year at 7% = $2,661/month. 15-year at 6.5% = $3,487/month. The 15-year pays $826/month more but saves approximately $193,000 in total interest. This makes financial sense if you can comfortably afford the higher payment. The risk: the higher required payment reduces financial flexibility if income drops.

Conventional refinance: most lenders require 620+ minimum; best rates at 740+. FHA Streamline refinance: typically 580+. VA IRRRL (Interest Rate Reduction Refinance Loan): no official minimum for most lenders, though many want 620+. USDA Streamlined Refinance: 640+ typically. Your credit score directly affects your rate - the difference between a 680 and 760 score can be 0.5–1% in rate, potentially hundreds per month in savings. Check your score and dispute any errors before applying.

Refinance Calculator - When Refinancing Makes Sense and When It Doesn't

Refinancing can save tens of thousands of dollars over a loan's lifetime - or cost money if done at the wrong time. The difference usually comes down to one variable: the break-even point. A lower rate always reduces monthly payments, but refinancing involves closing costs that take months or years to recoup. The break-even analysis tells you exactly when the savings begin.

The break-even formula: Break-Even Months = Total Closing Costs ÷ Monthly Payment Savings. Example: closing costs $7,500, monthly saving $187 break-even = 40 months (3.3 years). If you plan to stay longer than 40 months, refinance. If you're selling in 2 years, refinancing costs more than it saves - even with a significantly lower rate.

Refinancing Scenarios - When It Makes Sense

Strong Case to Refinance

Break-even point well inside your remaining tenure
Rate drop of 0.75%+ on a large balance ($300K+)
Switching from adjustable-rate mortgage (ARM) to fixed before rate resets
Removing PMI: if home value rose and you now have 20%+ equity
Shortening from 30-year to 15-year and can afford higher payment
Cash-out for high-return investments (at careful analysis)

Weak Case to Refinance

Planning to sell within 2–3 years (can't break even)
Small remaining balance - closing costs are a large % of savings
Extending back to 30 years on a nearly-paid loan (total interest cost explodes)
Credit score has worsened since original loan
Rate drop is marginal (under 0.5%) and closing costs are high
Cash-out for depreciating expenses (vacations, cars)

The 1% Rule - Why It's Outdated

Many homeowners have heard "refinance only if the rate drops by at least 1%." This was a reasonable heuristic in the early 2000s when average loan balances were lower and closing costs were proportionally higher. Today it's often wrong in both directions:

On a large loan ($500K+): A 0.5% rate drop saves $200–$300/month. With $6,000 in closing costs, break-even is 20–30 months - refinancing is clearly beneficial.
On a small remaining balance ($80K, 8 years left): Even a 2% rate drop might only save $70/month. Closing costs of $4,000 take 57 months to recoup - longer than the remaining term.

The only reliable analysis is the break-even calculation using your actual numbers. The calculator above does this precisely.

Mortgage Points - Are They Worth Buying Down?

Discount points allow you to pay extra upfront to get a lower interest rate. One point = 1% of the loan amount, typically reducing the rate by 0.125–0.25% depending on the lender. The decision is the same break-even analysis:

If 1 point costs $3,000 and reduces the rate by 0.25% (saving $50/month on a $300K loan), break-even = 60 months. Worth it if staying 5+ years. Each scenario is different - enter the points cost in the calculator above and it will show the combined break-even including both closing costs and points.

No-Cost Refinancing - The Trade-Off

Some lenders offer "no-cost refinancing" where closing costs are rolled into the loan or offset by a slightly higher interest rate. This removes the upfront cash barrier but has trade-offs:

Rolled-in closing costs: Closing costs are added to the loan balance. You pay interest on the closing costs for the life of the loan - a $8,000 closing cost rolled into a 30-year loan at 7% costs approximately $19,200 total.
Higher rate in exchange for lender credits: Lender pays closing costs, but gives you a slightly higher rate. You save upfront but pay more monthly. Break-even still applies - calculate whether the higher rate costs more over your remaining tenure than paying closing costs outright.
No-cost refinancing makes most sense when you're uncertain about your tenure, when rates might fall further, or when cash-flow is constrained.

How this calculator works, and where the numbers come from

The Refinance Calculator applies the standard formula for this calculation to the values you enter and updates the result as you type. The calculation itself happens in your browser, and the page explains the method so you can check any result by hand.

Please note: Results are estimates. Lender terms, local taxes and fees vary, so confirm figures with your lender or a qualified adviser.

Sources and further reading

Learn more

Read our guide: How EMI Is Calculated, With a Full Worked Loan Example

Last reviewed: October 6, 2026 by the CalcQube Editorial Team. See our editorial policy for how we build and check calculators, or report an error.

Mortgage Refinance Calculator