Refinance Calculator
Compare your current mortgage to a refinanced loan.
The Refinance Calculator compares your current mortgage with a new refinanced loan, showing monthly savings, the break-even point, and lifetime interest savings. Determine whether refinancing makes financial sense given closing costs and your timeline.
Examples
Rate Reduction Refinance
Cash-Out Refinance
Frequently Asked Questions
What is the break-even point?
Should I refinance to a longer term?
What is a cash-out refinance?
Quick Tips
- •A common rule of thumb: refinance if you can reduce your rate by at least 0.5-1%.
- •Consider the break-even period. If you plan to move before break-even, refinancing may not be worth it.
- •Extending the term lowers payments but may increase total interest paid.
- •Cash-out refinancing increases your loan balance and total interest.
- •Shop multiple lenders to find the best rate and lowest closing costs.
The Refinance Calculator compares your current mortgage with a new refinanced loan, showing monthly savings, the break-even point, and lifetime interest savings. Determine whether refinancing makes financial sense given closing costs and your timeline.
How to Use This Calculator
Enter your current loan balance, interest rate, and remaining term. Then enter the new loan rate, term, and closing costs. Optionally add a cash-out amount. The calculator compares your current and new loan, showing monthly savings, break-even point, and lifetime savings.
Understanding the Formula
Monthly Payment = P x r x (1+r)^n / ((1+r)^n - 1). Monthly Savings = Old Payment - New Payment. Break-Even = Closing Costs / Monthly Savings. Lifetime Savings = Old Total Interest - New Total Interest - Closing Costs.
Examples
Rate Reduction Refinance
Current: $250,000 balance at 7% with 25 years remaining ($1,767/mo). New: 5.5% for 30 years ($1,419/mo). Monthly savings: $348. With $5,000 closing costs, break-even in ~15 months.
Cash-Out Refinance
Current balance $200,000. Refinance for $230,000 at a lower rate, take $30,000 cash for home improvements. The new payment may be similar but you access equity.
Frequently Asked Questions
What is the break-even point?
The break-even point is how many months of savings it takes to recoup the closing costs. After break-even, you begin to truly save money from the refinance.
Should I refinance to a longer term?
It depends on your goals. A longer term lowers monthly payments but may increase total interest. If cash flow is a priority, a longer term helps. If minimizing total cost matters more, keep the term short.
What is a cash-out refinance?
A cash-out refinance replaces your existing mortgage with a larger loan, giving you the difference in cash. It is a way to access home equity but increases your debt.
Assumptions & Limitations
- Interest rates remain fixed for the new loan term; rate lock period and lender approval are assumed.
- Closing costs are paid upfront; some lenders offer no-closing-cost refinances with higher rates.
- No prepayment penalties exist on the current loan.
- You remain in the home for the duration; early move reduces or eliminates savings.
- Loan terms are conventional fixed-rate mortgages; adjustable-rate or special programs produce different results.