Mortgage Refinance Calculator

Should you refinance? (the quick answer)

The quick answer is: refinance when your monthly savings cover the closing costs well before you plan to sell or move, and when the full lifetime interest cost doesn't quietly wipe out those savings. Both conditions matter. A refinance that cuts $300 off your monthly payment looks great until you realize it restarts a 30-year clock on a loan you had only 8 years left to pay. The calculator above surfaces all three numbers — monthly change, break-even, and lifetime interest — so you can weigh them together rather than fixating on the rate alone.

How to read your break-even point

The break-even point tells you how many months of lower payments it takes to recoup what you spent on closing costs. If your closing costs are $6,000 and you save $200 a month, you break even in 30 months — just under 3 years. Stay in the home beyond that, and every month is money saved. Move before it, and the refinance cost you more than it saved. A good rule of thumb: if the break-even is inside 3–4 years and you expect to stay at least that long, the refinance is usually worth doing.

When you roll closing costs into the loan, the out-of-pocket break-even disappears — but that doesn't mean refinancing is free. The costs are now buried in a larger balance and accrue interest for the full term. The calculator shows a break-even of "No break-even" in that case because you never pay costs in cash; the real cost is the higher balance and slightly higher payment.

Monthly savings vs lifetime interest (the term-reset trap)

The most common refinance mistake is celebrating a lower payment without noticing the term extension. Say you have 15 years left on your mortgage and you refinance into a new 30-year loan. Even at a significantly lower rate, you've just agreed to make payments for 15 more years than your original schedule required. Each of those extra payments is mostly interest. The total interest figure in the results can flip from a savings to a cost in this scenario, which is why the calculator flags a term extension with a note.

The fix is straightforward: choose a shorter term — 15 or 20 years — or continue making the same payment you were making before. Paying more than the new minimum principal each month shrinks the term and cuts the interest you'd otherwise owe.

What refinancing costs

Closing costs for a refinance typically run 2% to 6% of the loan amount. On a $280,000 balance, that's $5,600 to $16,800. The major line items are: lender origination fee (often 0.5%–1% of the loan), discount points (optional, prepaid interest to buy a lower rate), appraisal ($300–$600), title search and insurance ($700–$1,500), and recording fees ($50–$500 depending on state). Some lenders offer "no-closing-cost" refinances, which really means the costs are folded into a slightly higher rate or the balance — they're never truly zero.

Paying costs in cash vs rolling them in

Paying closing costs in cash at signing is usually cheaper in the long run because you finance nothing extra and your new payment stays as low as possible. Rolling the costs into the loan keeps cash in your pocket today and lowers the barrier to refinancing, but you pay interest on those costs for the life of the loan. On a $6,000 cost rolled into a 30-year loan at 5.75%, you'll pay roughly $6,700 in extra interest over 30 years — a 12% premium on top of the original closing cost. Whether that trade is worth it depends on your cash position and how long you plan to stay.

When refinancing is and isn't worth it

Refinancing tends to be worth it when:

• The new rate is meaningfully lower and the break-even falls inside your expected stay.
• You're switching from an adjustable-rate mortgage to a fixed rate for payment stability.
• You're shortening the term (e.g., 30 to 15 years) to build equity faster and pay less total interest.
• You need to remove a borrower from the loan (e.g., after a divorce) or tap equity for major expenses.

Refinancing is often not worth it when:

• You're close to paying off the loan — even a much lower rate yields little savings at that stage.
• The break-even exceeds how long you plan to stay in the home.
• The rate drop is small and closing costs are high, making years of recovery time impractical.
• You're extending a short remaining term into a new 30-year loan, ballooning total interest.

Worked example

Suppose you have a $280,000 balance at 7.0% with 27 years remaining. You're offered a new 30-year loan at 5.75% with $6,000 in closing costs paid in cash (not rolled in).

Your current payment (P&I) works out to roughly $1,895/month. The new 30-year payment at 5.75% on $280,000 comes to about $1,634/month. That's a monthly saving of ~$261. With $6,000 out-of-pocket, you break even in roughly 23 months — under two years. If you stay in the home, you recoup the costs quickly.

However, the new loan extends your remaining term from 27 years to 30 — adding 3 extra years of payments. Total interest on the old schedule would have been roughly $334,000. Total interest on the new loan is roughly $308,000 — still a lifetime savings of ~$26,000 in this case, because the rate drop is significant enough to overcome the term extension. This won't always be true; plug in your own numbers to check.