Refinance Calculator

A refinance calculator determines whether replacing your current mortgage with a new loan saves money by calculating your monthly payment reduction, lifetime interest savings, and the number of months required to recoup closing costs. Refinancing makes financial sense when your break-even period is significantly shorter than the time you plan to stay in the home.

Interactive Refinance CalculatorInstant In-Browser Calculation

Estimated Output

Formula and Calculation Method

Break-even period and net savings formulas:

Monthly Savings = Current Monthly P&I - New Monthly P&I
Break-Even Period (Months) = Total Refinance Closing Costs ÷ Monthly Savings
Lifetime Net Savings = (Remaining Total Cost of Current Loan) - (Total Cost of New Loan + Closing Costs)

Important Federal Student Loan Warning: If you are evaluating refinancing federal student loans into a private loan, refinancing permanently strips federal borrower protections, including income-driven repayment (IDR) plans, loan forgiveness programs (PSLF), and federal deferment or forbearance rights.

Worked Example and Step-by-Step Calculation

Mortgage Refinance ($350,000 Balance from 7.5% down to 6.25%)

Input Values:

Remaining Balance: $350,000
Current Loan Rate: 7.5% (27 years remaining)
Current Monthly P&I: $2,504.60
New Loan Rate: 6.25% (new 30-year term)
New Monthly P&I: $2,155.30
Refinance Closing Costs: $7,000

1. Monthly Payment Savings = $2,504.60 - $2,155.30 = $349.30 / month

2. Break-Even Period = $7,000 ÷ $349.30 = 20.0 months (1.67 years)

3. Remaining interest on current loan (27 yrs) = $461,490

4. Total interest on new 30-yr loan = $425,908

5. Net Lifetime Savings = ($461,490 - $425,908) - $7,000 closing costs = $28,582

Result: Monthly Savings: $349.30 | Break-Even: 20 Months | Net Lifetime Savings: $28,582

How to Use the Refinance Calculator

Enter your remaining current mortgage balance and current interest rate.
Enter the new interest rate and new loan term you have been offered.
Input the estimated upfront closing costs or origination fees.
Review your break-even month count and decide if your planned residency exceeds this timeline.

Common Mistakes, Limitations & Practical Guidance

Resetting a loan back to a 30-year term can reduce monthly payments while actually increasing total lifetime interest if the rate reduction is minor.
Closing costs rolled into the loan balance increase the principal and accrue interest over time.

Frequently Asked Questions About Refinance Calculator

How do I calculate my refinance break-even months?

Divide total closing costs by your monthly payment savings. If refinancing costs $4,000 in fees and lowers your monthly payment by $160, your break-even point is 4,000 / 160 = 25 months (2.1 years).

What is the break-even period on a mortgage refinance?

The break-even period is the number of months it takes for your accumulated monthly payment savings to equal the upfront closing costs paid to complete the refinance. For example, if closing costs are $6,000 and you save $300 per month, your break-even is 20 months.

When is it worth refinancing a mortgage?

Refinancing is typically worthwhile if you can lower your interest rate by at least 0.75% to 1.0%, eliminate costly PMI, or switch from an adjustable-rate to a fixed-rate mortgage, provided you plan to stay in the home longer than the break-even period.

What are "no-closing-cost" refinances?

A "no-closing-cost" refinance simply means the lender covers fees in exchange for charging a slightly higher interest rate, or rolls the closing costs directly into your principal balance, meaning you still pay them over time with interest.

Does refinancing restart my 30-year loan clock?

Yes, if you refinance into a standard 30-year loan. To avoid restarting your repayment term, you can refinance into a 15-year or 20-year term, or continue making your old higher payment to pay off the new lower-rate loan even faster.

What is the federal protection warning on student loan refinancing?

Refinancing federal student loans with a private lender permanently forfeits federal protections, including Public Service Loan Forgiveness (PSLF), income-driven repayment plans (SAVE/PAYE), and administrative forbearance.