A mortgage refinance calculator answers the question lenders won't ask: does refinancing actually pay? A lower rate is not enough — refinancing costs real money, usually 2% to 6% of the loan in closing costs, and those costs only make sense if the monthly savings recover them before you sell or move. This tool runs that math: monthly savings, break-even point, and the lifetime cost of both loans.
The key number is the break-even point: closing costs divided by monthly savings — break even at 24 months and stay ten years, you win; break even at 60 months and move in three, you burn thousands. The calculator also catches the classic trap: restarting a loan with 20 years left as a fresh 30-year loan drops the payment but can raise the lifetime cost. The "over the life of the loan" line shows the honest bottom line.
How to use the Refinance Calculator
- Enter your current loan balance — the payoff amount on your mortgage statement.
- Add your current rate and the years remaining on the loan.
- Enter the refinance offer: new rate, new term, and total closing costs from the quote.
- Choose how costs are paid — rolled into the loan or out of pocket — then click "Compare & calculate".
Tips for a refinance that actually pays
- Rate-shop in a short window — multiple mortgage inquiries within a few weeks count as one credit pull.
- A 15-year refinance means a higher payment but can erase hundreds of thousands in interest — compare both terms.
- Watch "no-closing-cost" offers: the costs are often folded into a higher rate, which changes the break-even math.
When does refinancing make sense?
Usually when your rate drops by roughly 0.5 to 1 percentage point or more, break-even arrives well before you plan to move, and you have around 20% equity to avoid PMI on a conventional loan. If break-even stretches past your expected moving date, the math says wait.
Frequently asked questions
When is refinancing a mortgage worth it?
When the rate drops enough (usually 0.5 to 1 percentage point or more) and your break-even point — closing costs divided by monthly savings — arrives well before you plan to sell or move. Compare the lifetime cost of both loans, not just the monthly payment.
What are typical closing costs on a refinance?
Typically 2% to 6% of the loan amount: origination fees, an appraisal, title insurance, and escrow charges. Paying them out of pocket breaks even faster; rolling them into the loan raises your balance and total interest.
How is the refinance break-even point calculated?
Divide total closing costs by monthly payment savings. The result is the number of months until savings recover the refinance cost. Sell or move before then, and the refinance lost you money.
Does refinancing reset my loan term?
Often, yes — most refinances start a fresh 30-year clock, which can mean paying interest for years longer than your current loan. This calculator prices the new term against your remaining term so you see the true lifetime cost.