Mortgage Refinance Calculator

When a Lower Rate Isn't Automatically a Win

Refinancing trades your current mortgage for a new one, usually to capture a lower rate or shorten the term — but it also resets the clock and adds closing costs. A lower monthly payment doesn't automatically mean the refinance was worth it; that depends on how long it takes the monthly savings to recoup those upfront costs, known as the break-even point.

The Formula

Both payments use the same amortization formula — M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1] — applied to the same outstanding balance, just with different rates and terms.

What to Weigh Before Refinancing

• Break-even point — if you plan to move or sell before the break-even month, the closing costs likely won't be recouped.
• Resetting the term — refinancing into a fresh 30-year term after several years of an existing mortgage can lower the payment while extending how long you'll be paying interest overall.
• Rate spread — even a 0.5–1% rate improvement can produce meaningful monthly savings on a large balance.

Example: $280,000 Balance, 7% → 6%

Refinancing a loan with 27 years remaining at 7% into a new 30-year loan at 6%, with $5,000 in closing costs:

This example resets the term to 30 years; refinancing into a shorter term than what remains will raise the payment even at a lower rate.

How to Use This Calculator

1. Enter your Current Loan Balance, Current Interest Rate, and Years Remaining on the current loan.
2. Enter the New Interest Rate and New Loan Term you're being offered.
3. Optionally enter Closing Costs for the refinance.
4. Select Calculate to see the new payment, monthly savings, and break-even point.

Related Calculations

See the full year-by-year payoff picture with the Amortization Schedule Calculator, or model the original loan with the Mortgage Calculator.