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Mortgage Refinance Calculator

Compare a current mortgage with a proposed refinance, including new loan balance, closing costs, cash out, payment savings, break-even time, and term trade-offs.

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Monthly savings
Estimated monthly savings
$269.07
Current monthly payment
$2,023.86
New monthly payment
$1,754.79
Break-even point
1 year, 7 months
New loan amount
$285,000.00
Cost comparison
Interest left on current loan
$327,157.77
Interest on new loan
$346,725.85
Savings during old remaining term
$80,719.56
Lifetime payment difference
-$24,568.08
Payments compared
300 old vs 360 new

Refinancing $280,000.00 from 7.25% to 6.25% with $5,000.00 in closing costs.

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Add closing costs to the new loan balance instead of treating them as cash paid at closing.

Results update as you type.

Mortgage Refinance Calculator

A refinance replaces an existing mortgage with a new loan, so the right question is not simply whether the new payment is lower. This calculator compares the payment on your current remaining balance with the payment on a proposed refinance after closing costs, cash out, and the new term are included. It returns monthly savings or monthly increase, the break-even month for closing costs, the new loan amount, interest left on the current loan, interest on the new loan, savings during the old remaining term, and the lifetime payment difference.

That makes this page different from a plain mortgage calculator. A purchase-payment tool starts with a loan amount and rate. A refinance tool starts with a loan you already have and asks whether a new structure improves cash flow, cost, risk, or flexibility enough to justify new transaction costs. If you are considering extra principal instead of a new loan, compare this result with the mortgage payoff calculator and the mortgage with extra payments calculator. For qualification pressure, pair the new payment with the debt-to-income calculator.

Inputs that drive the comparison

Use the current unpaid principal balance from your statement, not the original purchase price and not the estimated home value. The current rate and years remaining describe the loan you would keep if you do nothing. The new rate and new term describe the proposed refinance quote. Closing costs are counted in the break-even calculation whether you finance them or pay them in cash. Cash out is additional debt you are adding on top of the existing balance.

The finance-costs switch matters. When it is on, the calculator adds closing costs to the new principal, so the new payment is based on the current balance plus cash out plus costs. When it is off, closing costs are not borrowed, but the calculator still subtracts them when it estimates savings during the old remaining term and still uses them for break-even. This mirrors the practical choice between bringing money to closing and rolling costs into the mortgage.

Mechanics and formula

Both the old and new payments use the standard fixed-rate amortization formula:

payment=P×i1−(1+i)−n\text{payment} = P \times \frac{i}{1 - (1 + i)^{-n}}

In that expression, P is the loan balance being financed, i is the monthly interest rate, and n is the number of monthly payments. For the refinance side, the calculator sets:

new principal=current balance+cash out+financed closing costs\text{new principal} = \text{current balance} + \text{cash out} + \text{financed closing costs}

Monthly savings are the current payment minus the new payment:

monthly savings=current payment−new payment\text{monthly savings} = \text{current payment} - \text{new payment}

When monthly savings are positive, break-even is:

break-even months=closing costsmonthly savings\text{break-even months} = \frac{\text{closing costs}}{\text{monthly savings}}

The cost comparison also multiplies each payment by its respective number of months. That is why a refinance can show a lower payment and a negative lifetime payment difference at the same time. A lower monthly bill may be created by extending the repayment period rather than by reducing total borrowing cost.

Checking a mortgage refinance scenario

Suppose the current mortgage balance is $280,000, the current rate is 7.25%, and 25 years remain. You are offered a new 30-year mortgage at 6.25% with $5,000 in closing costs, no cash out, and the closing costs financed into the new loan.

The current loan has 300 payments left. The current principal-and-interest payment is $2,023.86. Because closing costs are financed, the new principal is $285,000. Over 360 months at 6.25%, the new payment is $1,754.79. Monthly savings are therefore $269.07.

Break-even is the $5,000 closing cost divided by $269.07 of monthly savings, which rounds up to 19 months in the result display. The current loan has about $327,157.77 of interest remaining if kept to schedule. The new loan has about $346,725.85 of interest over its full 30-year life because the new term is longer and the financed balance is larger. During the old 25-year comparison window, the payment savings less closing costs equal about $75,719.56. Over full scheduled lives, however, the lifetime payment difference is about negative $24,568.08. That split result is the point of the calculator: cash flow improves, but lifetime cost can still rise.

When refinancing helps

Refinancing tends to deserve a closer look when a lower rate reduces the payment enough to recover closing costs before you expect to sell or refinance again. It can also help when a borrower wants to replace an adjustable-rate mortgage with a fixed-rate mortgage, remove mortgage insurance, shorten the term, or consolidate a cash-out need into one secured loan. A shorter-term refinance may increase the payment while reducing total interest; the primary result will show a monthly increase, so the cost-comparison group becomes more important than the headline.

Cash-out refinancing needs separate discipline. The calculator adds cash out to the new principal because it is debt, not free liquidity. If the cash pays off higher-rate debt, funds necessary repairs, or replaces an expensive construction loan, the broader household picture may improve. If it funds consumption, the lower mortgage rate can hide the fact that the home is now carrying more leverage for longer.

Tips before requesting a lock

Compare multiple written Loan Estimates on the same day if possible. Rates and points move, and two quotes are not comparable unless the lock period, points, lender credits, escrow treatment, and closing-cost categories are similar. Decide whether you are optimizing for monthly payment, total interest, term reduction, or risk reduction before looking at offers. A 30-year refinance, a 20-year refinance, and a no-cost refinance can all be rational, but they solve different problems.

Do not use the full escrowed payment from your statement as the current payment input. The calculator is modeling principal and interest. Taxes, insurance, and escrow deposits may change after refinance, but they are not part of the amortization formula. Also check whether your current loan has a prepayment penalty or a small payoff-statement fee. Those costs are not in the inputs, so add them mentally to closing costs if they apply.

This calculator provides an educational comparison, not financial, tax, or legal advice. A lender, housing counselor, or financial professional can help interpret quotes and disclosures for your specific loan, state, and time horizon.

Method scope and source version

Jurisdiction-neutral loan mathematics; lender contracts, disclosures, taxes, insurance, PMI, and compounding conventions vary. Evergreen method only; defaults/examples must not be represented as current market, legal, tax, or institutional data. The sources below support the stated method and definitions; they do not supply a live rate, quote, legal conclusion, lender offer, or institution-specific policy.

Sources

Frequently asked questions

What does this mortgage refinance calculator compare?
It compares the principal-and-interest payment on your remaining current loan with the payment on a proposed new loan. It also estimates the new loan amount, payment savings or increase, closing-cost break-even point, interest on each path, and the lifetime payment difference created by the new rate and term.
How is the refinance break-even point calculated?
The calculator divides closing costs by the monthly payment savings when the refinance payment is lower. If the refinance does not lower the monthly payment, it reports no practical break-even from payment savings alone, even if the refinance has another purpose such as cash-out funding or changing loan type.
Why can a refinance save monthly cash but cost more over time?
A lower payment can come from a lower rate, a longer repayment term, or both. Restarting the clock to a 30-year mortgage may reduce the payment yet keep interest running for more months, so the lifetime payment difference can be negative even when the monthly savings look attractive.
Should closing costs be financed or paid in cash?
Financing costs lowers the cash needed at closing, but it adds those costs to the new principal balance and can increase both the payment and interest. Paying costs in cash keeps the loan smaller, yet you should still count that cash in the break-even calculation.
Does this calculator include taxes, insurance, or escrow?
No. It compares principal-and-interest payments only. Property taxes, homeowners insurance, mortgage insurance, escrow shortages, prepaid interest, and lender credits can change the cash needed at closing or the full monthly housing payment, so review your Loan Estimate before deciding.

Related calculators

Mortgage Comparison CalculatorCompare two mortgage offers by monthly payment, points, closing costs, total interest, lifetime cost, savings, and break-even timing.Refinance CalculatorCompare an existing loan with a replacement loan, including refinance costs, cash in or cash out, monthly savings, interest, and break-even timing.Refinance Break-Even CalculatorEstimate the number of months required for refinance payment savings to recover upfront closing costs, plus net benefit over your planned holding period.Cash-Out Refinance CalculatorEstimate maximum net cash from a cash-out refinance, requested loan-to-value, equity left, and the new principal-and-interest payment.Mortgage Points CalculatorEstimate discount point cost, lower-rate payment savings, break-even months, net savings during your expected stay, and lifetime savings after point cost.10/1 ARM Mortgage CalculatorEstimate a 10/1 adjustable-rate mortgage with ten fixed years, annual resets afterward, a lifetime cap, payment range, interest, and total payments.

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