🔄 Refinance Calculator
Compare your current mortgage with a refinance offer to see the new payment, how long the closing costs take to recover, and the lifetime interest difference.
Quick answer: Refinancing a $250,000 balance from 7% with 27 years left to a new 30-year loan at 6% cuts the payment from $1,719.54 to $1,498.88 – saving $220.66 a month, so $5,000 of closing costs are recovered in 23 months.
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Refinance Calculator inputs
Result
Monthly savings
$220.66
New payment $1,498.88 vs. $1,719.54 today
| Current payment | $1,719.54 |
| New payment | $1,498.88 |
| Break-even point | 1 year 11 months |
- Interest left on current loan
- $307,128.21
- Interest on new loan
- $289,593.37
- Lifetime saving after costs
- $12,534.84
Current loan vs. refinance
| Current loan | Refinanced loan | |
|---|---|---|
| Rate | 7% | 6% |
| Term left | 27 years | 30 years |
| Monthly payment | $1,719.54 | $1,498.88 |
| Total interest | $307,128.21 | $289,593.37 |
| Total paid incl. closing costs | $557,128.21 | $544,593.37 |
How the refinance comparison works
The calculator works out the payment on your current balance over the years you have left, then the payment on the same balance at the new rate and term. The difference is your monthly saving, and closing costs divided by that saving gives the break-even point.
Break-even (months) = Closing costs ÷ (Old payment − New payment)
It also totals the interest you would still pay on each loan, so you can see whether you come out ahead over the whole life of the loan once closing costs are included.
Worked example
You owe $250,000 at 7% with 27 years remaining, so your principal and interest payment is $1,719.54. A new 30-year loan at 6% has a payment of $1,498.88, saving $220.66 a month. With $5,000 of closing costs you break even after 23 months. Remaining interest falls from $307,128.21 to $289,593.37 – a lifetime saving of $12,534.84 after the closing costs.
When refinancing makes sense
- You will stay past the break-even point. If you move or sell earlier, the closing costs outweigh the savings.
- The rate drop is meaningful. A reduction of 0.75–1 percentage point or more usually pays off on a large balance.
- The term doesn't undo the gain. Refinancing into a 15- or 20-year loan often raises the payment but saves far more interest.
- You want to remove PMI or switch from an adjustable to a fixed rate.
What this calculator leaves out
Figures are principal and interest only. Property tax, insurance and escrow don't change when you refinance, so they don't affect the comparison. Cash-out refinances, points and rolled-in closing costs would change the new loan balance.
Estimates for educational purposes, not financial advice.
Frequently asked questions
How do I calculate the refinance break-even point?
Divide your closing costs by the monthly savings. $5,000 of costs ÷ $220.66 saved per month = 22.7, so you break even in the 23rd month. If you might sell before then, refinancing loses money.
Is refinancing worth it for a 1% lower rate?
Often, if you plan to stay past the break-even point and are not stretching the term much. Check the lifetime interest figure too – restarting a 30-year clock can cost more overall even at a lower rate.
Why can lifetime interest go up even though the rate is lower?
Extending the term means paying interest for more years. Choose a new term equal to or shorter than your remaining years to make sure you save on total interest as well as the monthly payment.
What closing costs should I expect?
Refinance closing costs typically run 2–5% of the loan amount, covering origination, appraisal, title and recording fees. Some lenders offer no-closing-cost loans in exchange for a higher rate.