Mortgage Refinance Calculator United States
This mortgage refinance calculator estimates your new monthly payment, monthly savings and break-even point at a lower rate, with closing costs included.
What it does
The Mortgage Refinance Calculator works out your new monthly payment after refinancing to a different interest rate, how much you would save each month, and the break-even point — the number of months of savings it takes to recover your closing costs.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
Monthly = balance × i ÷ (1 − (1 + i)^−n), where i = annual rate ÷ 12; saving = current monthly − new monthly; break-even months = closing costs ÷ monthly saving
How it works
It re-amortizes your current loan balance over the remaining term at both the old and new rates, subtracts the new payment from the old to find your monthly saving, then divides your closing costs by that saving to show how long until the refinance pays for itself.
Where it is used
- Deciding whether a lower rate is worth the closing costs
- Comparing refinance offers by their break-even month
- Estimating the monthly cash-flow gain from refinancing
Worked example
Refinancing a $300,000.00 balance from 7% to 6% over the remaining 300 months brings the payment down to …, saving … a month and breaking even in … months.
Refinancing replaces your current mortgage with a new one, usually to get a lower rate. Closing costs can run to thousands of dollars, so the question is whether you will keep the loan long enough for the monthly savings to cover them. This calculator shows your new payment, the monthly saving and the break-even point where the refinance has paid for itself.
How the calculator works
Using the standard amortization formula, it spreads your current balance over the remaining term at your current rate and again at the new rate, and reports the difference in monthly principal-and-interest payments as your saving. Your closing costs divided by that saving give the break-even point in months. The rates and costs are your own figures, so the result reflects the offer you have.
Reading the break-even point
With $4,000 of closing costs and a $200 monthly saving, you break even in 20 months. Keep the loan longer and every month after that is a gain; sell or pay off the loan sooner and you do not recover the costs. The same refinance can therefore suit one borrower and not another. Someone staying ten years will accept a two-year break-even, while someone expecting to move next year should be cautious.
Rate drop versus term reset
Many refinances also restart the loan at a new 15 or 30 year term. Stretching the balance over more years lowers the payment further but can mean paying interest for longer and a higher total cost. This calculator keeps your remaining term fixed so you see the effect of the rate alone. If your refinance would extend the term, the payment would be lower than shown here, so check the new payoff date and total interest separately.
A worked example
Suppose you owe $300,000 with 300 months (25 years) left at 7 percent, and you can refinance to 6 percent with $4,000 of closing costs. At 7 percent the payment is about $2,120 a month; at 6 percent it is about $1,933, a saving of about $188 a month. $4,000 divided by $188 is a break-even of about 21 months. If you expect to keep the home well beyond that, the refinance pays off, and the saving continues for the rest of the loan.
When refinancing may not be worth it
A small rate drop of a quarter or half a point may produce a modest saving and a break-even beyond the time you expect to keep the loan. High closing costs, or discount points you never earn back, push break-even further out. Resetting a nearly paid-off loan to a new 30 year term can hide a larger lifetime interest bill behind a lower payment. Compare the break-even point with how long you realistically plan to stay.
Assumptions and limitations
The tool covers principal and interest only. It does not include property taxes, homeowners insurance, private mortgage insurance or HOA dues, which often appear in the same monthly bill but do not change with the rate. It assumes fixed rates on both loans, keeps the remaining term constant and treats closing costs as paid up front, not added to the loan balance. Use the Loan Estimate from your lender for the most accurate figures and talk to a mortgage professional before you commit.
About This Mortgage Refinance Calculator
Use this mortgage refinance calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
How does a mortgage refinance calculator work?
What is a good break-even point for refinancing?
What closing costs should I include?
Does refinancing reset my loan term?
Should I refinance to save on my monthly payment?
About the author
