Refinance Calculator

Introduction

This Refinance Calculator compares your existing loan to a proposed refinance on monthly payment, total interest, and break-even time after closing costs. Enter the current balance, rate, and remaining term alongside the new rate, term, and fees to see whether a refi pays for itself before you plan to sell or pay off the loan.

Who this calculator is for

Homeowners who received a rate quote after a market drop use this page to see if fees eat the benefit. You might also refinance to drop PMI, shorten term, or cash out equity; this tool focuses on rate-and-term savings math first. If you expect to move in three years, break-even months matter more than thirty-year interest totals.

Buyers comparing initial loans should use the Mortgage Calculator or APR Calculator. This page assumes you already have a loan with a known balance.

What it estimates

The calculator runs two amortization paths: stay with the current note versus replace it with a new loan at the entered balance, rate, and term. Monthly payment difference multiplied into break-even months divides closing costs into recoverable savings. Total interest over a chosen horizon compares lifetime cost if you hold either loan to payoff or to a sale date.

Cash-out proceeds, escrow refunds, skipped payments, and lender credits are not always modeled. APR on the new loan blends fees differently than simple break-even on payment drop. ARM refinance into fixed or fixed into ARM requires careful rate assumptions this page may treat as fixed only.

Inputs explained

Use a payoff quote dated close to your expected closing.

• Current balance: Amount to pay off the existing loan, sometimes slightly higher than statement principal.
• Current rate and remaining term: Note rate and years or months left at the regular payment.
• New rate and term: Offered refi rate and new amortization, often resetting the clock to thirty years.
• Closing costs: Lender fees, title, appraisal, and prepaid items you pay out of pocket or net from proceeds.
• Planned years in home (optional): Horizon for interest comparison if you will sell before payoff.

How to read the results

Monthly savings is old PI minus new PI. Break-even divides closing costs by monthly savings when savings are positive. If break-even is forty months and you might relocate in twenty-four, the refi likely fails unless non-payment benefits such as PMI removal apply.

Resetting to a new thirty-year term lowers the payment but can increase total interest even at a lower rate because you extend the tail. Compare a refi to twenty-five or twenty years using the same new rate, or model extra principal with the Mortgage Payoff Calculator.

Worked example

Balance $310,000 at 6.80% with twenty-seven years remaining: payment about $2,040. Refinance at 5.90% into a new thirty-year loan on $310,000: payment about $1,835, saving roughly $205 per month. Closing costs $6,500 imply break-even near thirty-two months ($6,500 divided by $205).

If you sell in year four, you recover costs and keep roughly two years of savings. If you sell in year two, you likely lose net versus staying put unless other factors such as removing FHA MIP apply.

Practical use cases

Compare lender quotes with different points and credits by swapping closing cost and rate fields. Test whether paying $3,000 in points for a quarter-point rate drop clears break-even inside your horizon. Model PMI removal on a conventional refi when appraisal shows seventy-eight percent LTV.

When rates rise, run the calculator backward to see how much payment would rise if you wait. Pair with the Debt Ratio Calculator if a lower payment improves qualification for other credit.

Limitations and related tools

Underwater loans, FHA streamline, VA IRRRL, and HARP-style programs have specific rules and reduced documentation not reflected here. Prepayment penalties on the old loan, temporary buydowns on the new loan, and subordinate lien payoff are manual adjustments. Property tax reassessment after cash-out is not modeled.

For fee-inclusive annual cost comparison use the APR Calculator. For original PITI on a purchase use the Mortgage Calculator. See mortgage basics for timing and documentation expectations on a refi.

How It Works

1. Enter current loan. Type remaining balance, current rate, and years or months left on the note.
2. Enter new offer. Add proposed rate, new term, and total closing costs from the Loan Estimate.
3. Calculate savings. Run the comparison and read monthly payment change and break-even months.
4. Set your horizon. Compare break-even to how long you expect to keep the loan or the home before committing.

Formula and methodology

The Refinance Calculator uses this identity for the scenario you enter. A bank, payroll system, or tax program may round on a 360-day year or average daily balance, so a statement can differ by a small amount.