Mortgage Refinance Calculator – Should I Refinance?

Refinancing your mortgage can lower your monthly payment, help you pay off your home faster or let you tap into equity. It can also be expensive and extend your debt if the numbers don’t work. This mortgage refinance calculator helps you compare your current loan with a new one, estimate monthly savings, interest savings and your break-even point so you can decide whether a refi actually makes sense.

How to use the mortgage refinance calculator

The refinance calculator on this page is designed for standard fixed-rate mortgages. It compares your current loan with a potential new one and shows whether refinancing is likely to save or cost you money. Here’s how to fill in each field so you get realistic results.

1. Enter your current mortgage details.

• Remaining mortgage balance ($): Use the current principal balance from your most recent mortgage statement, not your original loan amount.
• Current interest rate (APR, %): Enter the annual interest rate on your existing mortgage. If your rate has adjusted, use the rate that currently applies.
• Years left on your loan: Look at how many years remain on your amortization schedule (for example, 26 years left on a 30-year mortgage).
• Monthly taxes, insurance & HOA: Add together your monthly property taxes, homeowners insurance and HOA dues. These costs typically do not change much when you refinance, but the calculator includes them so you can see the impact on your total housing payment.

2. Enter your new loan assumptions.

• New interest rate (APR, %): Use a realistic quoted rate for the refinance scenario you are considering (for example, 6.25% for a 30-year fixed).
• New loan term (years): Choose how long you want the new mortgage to last. Many homeowners refinance back into a new 30-year term, while others pick a shorter 15- or 20-year term to build equity faster.
• Discount points (% of loan amount): If you are paying points to buy down the interest rate, enter the total percentage here (for example, 1.0 point = 1% of the new loan amount). If not, leave it at 0.
• Other closing costs ($): Add up estimated lender fees, title fees, appraisal, recording fees and other closing costs. Lenders typically estimate these in your Loan Estimate.
• Cash-out amount ($): If you plan a cash-out refinance to tap home equity, enter the extra amount you want to borrow on top of paying off your existing balance.
• How you will pay closing costs: Choose whether you plan to roll points and closing costs into the new loan balance or pay them out of pocket at closing.

3. Estimate how long you will keep the mortgage.

In the last field, enter how many years you expect to keep this mortgage before you sell the home or refinance again. The calculator uses this “horizon” to estimate savings after closing costs over the period you actually care about, not just over the full 30-year term.

4. Review your results.

The calculator updates automatically as you change your numbers. As you adjust your inputs, it compares your current loan to the new one and shows you:

• Your current and new principal & interest payments
• Estimated monthly savings (or extra cost) from refinancing
• Estimated change in your total housing payment including taxes, insurance and HOA
• Interest cost difference over the full loan term
• Total upfront costs (points + fees)
• How many months it takes to break even on those costs
• Estimated net savings (or loss) over your chosen time horizon

How to read your refinance results

When you run the numbers, you’ll see two summary cards: one focused on monthly cash flow and one on long-term costs and savings. Here’s how to interpret each metric.

Estimated monthly savings. This is the difference between your current principal & interest payment and the new one. A positive number means your monthly mortgage payment goes down; a negative number means it goes up. Remember that your total housing payment also includes taxes, insurance and HOA, so the calculator shows that side-by-side as well.

Interest cost difference over full term. This compares the total interest you would pay if you keep your current mortgage to the interest on the new loan if you keep it for the entire term. A refinance that lowers your rate but stretches your loan back out to 30 years can reduce your payment but still increase lifetime interest, so this number is critical.

Upfront costs (points + fees). Refinancing usually isn’t free. Lenders typically charge application and underwriting fees, and you’ll pay for things like appraisal, title work and government recording. If you buy points, that cost is added here too. Even when the lender advertises “no-closing-cost” refinancing, you usually pay for it through a higher interest rate.

Months to break even. The break-even period tells you how long it takes for your monthly savings to repay the upfront costs of refinancing. If your total closing costs are $5,000 and you save $200 per month, your break-even point is around 25 months. If you think you’ll move or refinance again before that, a refi may not be worth it.

Savings over your time horizon. The calculator also estimates how much you might save (or lose) over the number of years you expect to keep the mortgage, after subtracting closing costs. This is often more useful than looking only at lifetime interest, especially if you plan to move in five to seven years.

What if the numbers are negative?

• If monthly “savings” are negative, the new payment is higher. That might still be okay if your goal is to pay off the home faster with a shorter term.
• If interest savings are negative, you are paying more interest overall, often because you reset the clock on a 30-year mortgage.
• If the break-even period is much longer than you plan to stay in the home, refinancing probably doesn’t make sense for you.

When does refinancing your mortgage make sense?

There is no single rate drop that automatically makes refinancing a good idea. Instead, you need to look at your goals, the costs and how long you plan to stay in the home. Here are some common situations where a refinance can make sense.

You can substantially lower your interest rate. Historically, many experts suggested refinancing when you can lower your rate by around one percentage point or more, but with today’s higher rates, a smaller drop may still make sense if your balance is large and closing costs are reasonable. Your credit score, debt-to-income ratio and equity all affect the rate you are offered.

You want to reduce your monthly payment. If you are struggling with cash flow, refinancing to a lower rate and/or a longer term can cut your monthly payment. Just remember that extending the term often increases the total interest you pay over time, even if your monthly bill drops.

You’re switching from an ARM to a fixed-rate mortgage. Many homeowners refinance an adjustable-rate mortgage into a fixed-rate loan to lock in predictable payments, especially if they plan to stay in the home for many years and are worried about rising rates.

You want to pay off your home faster. Refinancing a 30-year mortgage into a 15- or 20-year term often raises the monthly payment but significantly reduces total interest paid. If your income has grown and you can comfortably afford the higher payment, this can be a powerful way to build equity faster.

You are dropping mortgage insurance. If you have an FHA loan with ongoing mortgage insurance premiums or a conventional loan with private mortgage insurance, refinancing into a conventional loan once you have at least 20% equity can sometimes remove those insurance costs and lower your payment.

You’re consolidating higher-interest debt. Some borrowers use a cash-out refinance to pay off high-rate credit cards or personal loans. This can simplify your finances and reduce your overall interest rate, but it also turns unsecured debt into debt secured by your home, which raises the stakes if you can’t make the payments.

Costs and risks of refinancing a mortgage

Refinancing can be a smart move, but it’s not free money. Understanding the costs and risks will help you avoid a refi that looks attractive on the surface but leaves you worse off.

Closing costs add up quickly. Most homeowners pay between 2% and 6% of the new loan amount in closing costs, including lender fees, appraisal, title insurance, government recording fees and more. On a $300,000 refinance, that can easily be $4,000–$9,000 or more, depending on where you live and your lender’s pricing.

“No-closing-cost” doesn’t mean no cost. In a no-closing-cost refinance, the lender typically covers upfront fees in exchange for a higher interest rate, or rolls them into the new loan balance. Your break-even math still matters; you’re just paying the costs over time instead of at the closing table.

You may reset the clock on your mortgage. If you’ve been paying your current 30-year mortgage for several years, refinancing into a new 30-year loan can push your payoff date far into the future. Even with a lower rate, the extra years of interest can reduce or erase your savings.

Prepayment penalties and other fine print. Some older mortgages have prepayment penalties or other fees if you pay off the loan early. Check your existing loan documents and your new Loan Estimate to understand any penalties before committing to a refi.

Qualifying may be harder than before. Lenders will check your credit, income, assets, employment and debt-to-income ratio. If your finances have weakened since you took out the original mortgage, you may not qualify for the best rates or may not be approved at all.

Your home is still at risk if you can’t pay. Just like your original mortgage, a refinanced loan is secured by your home. If you stretch too far on the payment, use a refinance to consolidate unsecured debt or take too much cash out, you can increase your risk if your income drops or expenses rise.

Example: How a refinance break-even point works

To see how the break-even math works in practice, consider this simplified example. We’ll ignore taxes, insurance and HOA to keep the focus on principal and interest.

In this scenario, refinancing lowers the monthly principal and interest payment by roughly $280. With $5,000 in closing costs, the break-even point is around 18 months ($5,000 ÷ $280 ≈ 18). If you expect to keep the mortgage longer than that and are comfortable with resetting the term, the refi could make financial sense. If you plan to move within a year, it probably does not.