Mortgage Refinance Calculator

The two numbers that decide a refinance

Break-even point = closing costs ÷ monthly savings. If you will keep the loan past that month, refinancing starts paying. Lifetime benefit = interest on the old loan minus interest on the new loan, minus closing costs. It catches the trap of a lower payment that quietly costs more because the 30-year clock restarted.

A worked example — closer than you would think

Say you owe $320,000 at 7.4% with 26 years left (payment $2,270, remaining interest $388,234). Refinancing to 6.1% for 30 years drops the payment to $1,939 — a juicy $331 a month saved, breaking even on $6,500 of costs in about 20 months. But because the term stretches by four years, lifetime interest is $378,083, so the true net benefit is only about $3,651. Choose a 20-year term instead and the picture transforms: slightly higher payment, tens of thousands less interest.

When refinancing usually makes sense

• Your rate drops by roughly 0.75–1% or more and you will stay past break-even.
• You can shorten the term (30 → 15/20 years) without straining cash flow.
• You are removing PMI after reaching 20% equity, or leaving an FHA loan to end MIP.
• You need to exit an ARM before adjustments begin.

Compare a refinance against simply paying extra using the payoff calculator — extra payments have no closing costs. Weighing two new offers? The loan comparison calculator puts them side by side. And read when refinancing actually makes sense before you apply.