This refinance calculator tells you whether refinancing your mortgage actually pays: compare your current loan with the new offer and see the monthly savings, the break-even month on closing costs, and the lifetime interest difference.
What Is a Refinance Calculator?
Refinancing replaces your current mortgage with a new one — ideally at a lower rate. A refinance calculator weighs the three things that decide whether it is worth it: the new monthly payment, the upfront closing costs, and the total interest over the life of both loans. It is part of our Finance Calculators collection. For the loan you would be replacing, our Mortgage Calculator shows its original math, and the Amortization Calculator its full schedule.
Worked Example (Verified)
You owe $280,000 at 7% with 25 years left (payment $1,978.98). A lender offers 5.5% for 30 years with $4,500 in closing costs:
- New payment: $1,589.81 → you save $389.17/month
- Break-even: $4,500 ÷ $389.17 ≈ 12 months to earn the costs back
- Lifetime: even after resetting to a fresh 30-year term, the lower rate wins on total interest here — the calculator shows your exact figure
Notice the trap the calculator protects you from: extending the term lowers the payment partly by stretching the loan, not just by the rate. The lifetime-savings card counts all payments on both loans, so a “cheaper” payment that costs more overall gets flagged, not hidden.
The Three Questions Every Refinance Must Pass
- Break-even: will you stay in the home longer than costs ÷ monthly savings? If you might move in 2 years and break-even is 3, skip it.
- Lifetime cost: total interest of the new loan + costs vs. the old loan’s remaining interest — the honest comparison.
- Term reset: refinancing 5 years into a 30-year loan back into a new 30-year loan means 35 years of payments. A 20- or 15-year refinance often beats a 30-year one on lifetime cost even at a slightly higher payment — try both terms above.
The alternative to refinancing — keeping the loan and paying it down — is modeled by our Mortgage Payoff Calculator.
Related Tools
- Mortgage Payoff Calculator — the no-refinance alternative
- Mortgage Calculator
- Amortization Calculator
Frequently Asked Questions
When does refinancing make sense?
When the rate drop is meaningful (roughly 0.75–1%+), you will stay past the break-even point, and the lifetime interest — including the term reset and closing costs — actually falls. The calculator checks all three at once.
What is the break-even point?
Closing costs ÷ monthly savings, in months. After that month, the refinance is ahead. Selling or moving before break-even loses money.
What closing costs should I expect?
Typically 2–5% of the loan amount (appraisal, origination, title, recording). “No-closing-cost” offers usually trade those fees for a higher rate — compare lifetime totals.
Should I refinance into a shorter term?
Often yes if the payment fits your budget: 15- and 20-year loans carry lower rates and slash lifetime interest. The higher payment is the trade-off. Model it above before deciding.
Does refinancing hurt my credit?
A hard inquiry and a new account cause a small, temporary dip; rate-shopping within a short window (about 14–45 days) usually counts as a single inquiry.
Is this refinance calculator free?
Yes — free, instant, no sign-up. It provides estimates for comparison, not financial advice.