Mortgage Refinance Savings Calculator – See Your Break-Even in 3 Easy Steps
Mortgage Refinance Calculator
Use this mortgage refinance savings calculator to see if refinancing your home makes financial sense based on your current loan and new offer.
Use this free mortgage refinance savings calculator to check whether a new home loan offer is worth taking. Enter your remaining balance, current rate and years left, then the new rate, new term and closing costs. The tool shows your monthly payment savings, the break-even point and the lifetime cost of both loans side by side.
Quick answer
Refinancing pays off when the savings outweigh the closing costs before you sell or refinance again. Break-even months = closing costs ÷ monthly savings. Moving a $300,000 balance from 7% (25 years left) to 5.75% over 30 years cuts the payment by about $370 a month and breaks even in about 17 months, but restarting a 30-year term means slightly higher lifetime cost. A 20-year term at the same rate saves about $124,601 over the life of the loan.
Table of Contents
A lower rate sounds like an easy win, yet refinancing has costs: lender fees, appraisal, title and often a longer repayment period. A smaller monthly payment can hide a bigger total bill.
This mortgage refinance savings calculator looks at both the monthly view and the lifetime view so you can make a balanced decision. It runs in your browser and stores nothing.
What Is Mortgage Refinancing?
Refinancing means replacing your existing home loan with a new one, usually to get a lower interest rate, change the loan term, switch from an adjustable to a fixed rate or take cash out of your equity. The new loan pays off the old one, and you start making payments on the new terms.
Refinance Formulas
- Monthly payment (P&I) = L × r ÷ (1 − (1 + r)−n), with L the balance, r the monthly rate and n the number of months
- Monthly savings = current payment − new payment
- Break-even point = closing costs ÷ monthly savings
- Total remaining interest = payment × months − balance
- Lifetime savings = current lifetime cost − (new lifetime cost + closing costs)
How to Use the Mortgage Refinance Savings Calculator
Step 1: Enter Your Current Loan and the New Offer
Type your remaining loan balance, current interest rate and remaining years. Then enter the new interest rate, choose the new loan term (10, 15, 20 or 30 years) and add the total closing costs from your lender’s estimate.
Step 2: Check Monthly Savings and Break-Even
Press Calculate Savings. Here the payment falls from $2,120 to $1,751, saving $370 a month, and the $6,000 closing costs are recovered in about 17 months. Yet because the term restarts at 30 years, total remaining interest only drops from $336,101 to $330,259, and after costs the lifetime result is a small $157 loss.
Step 3: Compare a Shorter Loan Term
Switch the new term to 20 years. The monthly payment barely changes ($2,106), so the break-even point looks very long, but you finish five years earlier and pay far less interest: lifetime savings reach $124,601 including closing costs. Shorter terms suit borrowers who can afford a similar payment and want to save interest.
When Does Refinancing Make Sense?
Run your numbers through the mortgage refinance savings calculator first, then check these signs:
- The new rate is meaningfully lower than your current rate, often by 0.75 to 1 percentage point or more.
- You plan to stay in the home longer than the break-even period.
- Your credit score and home equity have improved since you took the original loan.
- You want to move from an adjustable rate to a fixed rate for stability.
- You can shorten the term without straining your budget.
When Refinancing May Not Pay Off
- You expect to sell or move before the break-even point.
- Closing costs are high compared with the monthly saving.
- A new 30-year term adds years of payments to a loan you have already paid down.
- Your current loan has a prepayment penalty.
Refinance Example Summary
| Option | Monthly payment | Total interest | Lifetime result after $6,000 costs |
|---|---|---|---|
| Keep current loan (7%, 25 years) | $2,120 | $336,101 | – |
| Refinance to 5.75%, 30 years | $1,751 | $330,259 | About $157 worse |
| Refinance to 5.75%, 20 years | $2,106 | $205,500 | About $124,601 better |
Comparing owning with renting instead? Use the Rent vs Buy Property Calculator. Lenders also look at your debt-to-income ratio before approving a refinance.
Frequently Asked Questions
How do I know if refinancing is worth it?
Compare the monthly saving with the closing costs to find the break-even point, then check whether you will stay in the home longer than that. Also compare the lifetime interest of both loans.
What is the refinance break-even point?
It is the number of months it takes for monthly savings to repay the closing costs. Divide closing costs by the monthly saving.
How much does it cost to refinance?
Closing costs often run around 2% to 5% of the loan amount, depending on the lender, location and fees.
Why can a lower rate still cost more overall?
If the new loan restarts a long term, you pay interest for more years. The lower payment can hide a higher or similar total cost.
Does the calculator include taxes and insurance?
No. It covers principal and interest only. Property tax, insurance and PMI are separate.
Is my information stored?
No. The calculator runs in your browser and saves nothing.