Mortgage refinance calculator
Compare a current loan with a replacement loan.
- Formula and assumptions shown
- Table and CSV export
- Runs in your browser
How it works
The calculator models the current remaining balance and the proposed replacement balance under separate rates and terms. It shows payment difference, lifetime interest, fees, and a simple fee break-even month when the payment reduction covers the entered refinance cost before the current loan would end.
Simple fee break-even months = refinance fees ÷ positive monthly payment savings, rounded up and only reported within the current loan's remaining term; compare two amortization schedules with their own rates and terms.
A lower payment can come from extending the term and may not mean a lower lifetime cost. Compare both the monthly result and total interest before drawing a conclusion.
Assumptions
- Both loans are fixed-rate and fully amortizing.
- The current balance is the amount refinanced; the new term starts at the comparison date.
- Fees are entered as a cash cost and are not silently rolled into the new balance.
- The break-even measure is a payment-based fee recovery estimate, not a full lifetime-cost comparison.
- Taxes, insurance, prepayment penalties, and live rates are excluded unless entered.
Worked example
$200,000 remaining balance with equal 25-year terms
At 7% on the current loan and 6% on the new loan, the estimated payments are $1,413.56 and $1,288.60. With $4,000 in fees, the monthly reduction is $124.96 and the first whole month that covers those fees is ceiling($4,000 ÷ $124.96) = 33 months.
Step by step
- Payments on both loans. Both loans run 25 × 12 = 300 months. At 7% ÷ 12 = 0.5833% a month, the current payment on $200,000 is $1,413.56; at 6% ÷ 12 = 0.5% a month, the new payment is $1,288.60.
- Monthly difference. $1,413.56 − $1,288.60 = $124.96 lower payment each month.
- Simple fee break-even. $4,000 of closing costs ÷ $124.96 = 32.01 months, rounded up to 33 months, the first whole month in which the payment savings cover the fees.
- Lifetime interest on each loan. Current loan: 300 × $1,413.56 − $200,000 = $224,067.52 of interest. New loan: 300 × $1,288.60 − $200,000 = $186,580.84.
- Interest and fee savings. $224,067.52 − $186,580.84 − $4,000 = $33,486.68 saved over the full term, because the new loan is no longer than the time left on the current one.
How to read your result
The headline, Simple fee break-even, is the number of months of lower payments needed to add up to the closing costs. It shows No payment reduction when the new payment is not lower, and Not within current loan term when the savings would take longer than the current loan has left. It is called simple because it compares payments only; it does not account for interest the fee could have earned elsewhere or for the difference in how fast each loan’s balance falls.
Current payment and New payment are principal and interest only. Monthly difference is current minus new, so a negative number means the new payment is higher. Interest and fee savings compares total interest on each loan over its own full term and subtracts the closing costs; a negative figure means the replacement costs more in total, and the result notes say so first. The table sets the payment, total interest, and upfront costs of both loans side by side.
The model assumes the new loan is kept to its end. If the home is sold or the loan is refinanced again before the break-even month, the closing costs are not recovered. Closing costs added to the new balance instead of paid in cash, prepayment penalties, and tax effects are outside the model.
What changes the result most
- New loan term
- Refinancing the same $200,000 into a 30-year loan at 6% lowers the payment to $1,199.10 and the break-even to 19 months, but interest and fee savings turn negative at −$11,608.86: the longer loan costs that much more in total.
- Size of the rate cut
- With a new rate of 6.5% instead of 6%, the monthly difference shrinks to $63.14, break-even stretches to 64 months, and lifetime savings fall to $14,943.22.
- Closing costs
- Doubling the costs to $8,000 moves break-even to 65 months and lowers lifetime savings to $29,486.68, exactly $4,000 less, because the fee is subtracted dollar for dollar.
Questions
Can a lower payment cost more overall?
Yes. A longer replacement term can reduce the monthly payment while increasing total interest. When the entered scenario costs more over the full new term, the result says so first. Review both measures.
Does the break-even include every cost?
It uses the entered fees and monthly payment difference and stops at the current loan's remaining term. It does not replace the separate lifetime interest and fee comparison; lender and local charges can vary.
Does it fetch refinance rates?
No. Enter the rates and fees for the scenario you want to test.
When should I refinance my mortgage?
The calculator does not pick a time; it measures the trade-off. The two main figures are how many months it takes to recover the closing costs, compared with how long the loan is likely to be kept, and whether the new loan costs less over its full term. Rules of thumb such as a set rate drop leave out the balance, the fees, and the remaining term, which is why the same rate cut can pay back in under three years on one loan and never on another.
What closing costs come with a refinance?
A refinance usually carries many of the same charges as a purchase loan: origination or application fees, an appraisal, title search and title insurance, recording fees, and any discount points. Amounts vary by lender, loan size, and location. Lenders must provide a Loan Estimate within three business days of an application, and it itemizes these costs. Enter the cash total in the closing costs field; costs rolled into the new balance are not modeled here.
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Sources
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.