Mortgage Refinance Calculator
Whether refinancing actually pays, once the closing costs and the reset term are counted — not just the lower monthly payment.
Runs entirely in your browser. Nothing you enter is uploaded.
Written and maintained by ReadoutKit / Takashi Yamazaki
How this works
The question a refinance quote does not answer
A refinance offer arrives as a single attractive number: the new monthly payment, lower than the one you have now. Everything that determines whether the deal is good is left out of that number. The fees are paid once and recovered slowly. The term is reset, which lowers the payment for reasons that have nothing to do with the rate. And the balance you still owe at any point in the future — the part that is actually your money — moves in ways the payment does not show.
This calculator compares the two loans on the only basis that settles the question: what each one costs you in total, month by month, counting both the cash that has left your hands and the debt still hanging over you.
Why the usual break-even formula misleads
Almost every refinance calculator computes break-even as closing costs divided by the monthly saving. Six thousand dollars of fees, two hundred dollars a month saved, thirty months to break even. It is a clean formula and it is wrong whenever the term changes.
Suppose you have 25 years left and refinance into a new 30-year loan. Part of the payment drop comes from the lower rate and part comes from stretching repayment over five more years. The formula treats both parts as saving, so a longer term makes the break-even look faster. In reality the stretched loan pays down principal more slowly, so at every point in the future you owe more than you would have. That is not a saving; it is a deferral, and it shows up as a debt you still carry after the old loan would have been gone.
The break-even shown here counts paid-plus-owed on both sides. When you match the new term to the years remaining, it lands close to the simple formula, because there is nothing to hide. When you extend the term, it moves out — sometimes years out, sometimes to never. Both numbers are displayed so you can see the gap between them for your own figures.
How far the rate has to fall
A $320,000 balance with 28 years to run at 7.0%, refinanced into the same remaining term with $6,400 paid up front, varying only the new rate.
| New rate | New payment | Monthly saving | Break-even | Lifetime saving |
|---|---|---|---|---|
| 6.8% | $2,122 | $52 | 96 mo | $11,214 |
| 6.5% | $2,070 | $104 | 48 mo | $28,643 |
| 6.3% | $2,019 | $156 | 32 mo | $45,885 |
| 6.0% | $1,968 | $206 | 24 mo | $62,934 |
| 5.5% | $1,869 | $306 | 16 mo | $96,435 |
A quarter-point cut saves $52 a month and needs 96 months — eight years — before the closing costs are back. Whether that is a good deal is not a question about interest rates; it is a question about whether you will still own this house in 2034. Half a point halves the wait to 48 months, and a full point brings it down to 24. The break-even shortens faster than the rate cut grows, because the saving compounds against a fixed cost.
Closing costs never show up in the monthly figure
Same full-point cut, varying only what the refinance costs to arrange.
| Closing costs | Monthly saving | Break-even | Lifetime saving |
|---|---|---|---|
| $2,000 | $206 | 8 mo | $67,334 |
| $4,000 | $206 | 15 mo | $65,334 |
| $6,400 | $206 | 24 mo | $62,934 |
| $9,000 | $206 | 34 mo | $60,334 |
| $14,000 | $206 | 53 mo | $55,334 |
The monthly saving is $206 in every row. Costs do not appear in it at all — they only move the break-even and the lifetime figure. So a borrower comparing offers on “how much lower is my payment” gets the same answer from a $2,000 deal and a $14,000 one, while the payback period runs from 8 months to 53.
The number the lender leads with is the monthly saving. It is accurate, and it cannot decide this for you.
The monthly saving and the lifetime saving point opposite ways
Rate fixed at 6.0% and costs at $6,400, varying only the term of the new loan.
| New term | New payment | Monthly saving | Lifetime saving |
|---|---|---|---|
| 15 yr | $2,700 | -$526 | $238,254 |
| 20 yr | $2,293 | -$118 | $174,096 |
| 28 yr | $1,968 | $206 | $62,934 |
| 30 yr | $1,919 | $256 | $33,633 |
The two right-hand columns have opposite signs. Refinancing into 15 years raises the payment by $526 a month and saves $238,254 over the life of the loan. Stretching to 30 years lowers the payment by $256 and leaves only $33,633 of lifetime saving. Around the 28-year row — matching what is left on the current loan — going up the table means paying more each month and far less in total; going down means the reverse.
Refinancing to a lower rate and a longer term takes the rate cut as monthly relief rather than as interest saved. That can be the right call: when cash flow is tight, $256 a month is worth more than $29,301 spread across three decades. It is only a bad call when it is made without seeing the trade. Any offer that lengthens the term should be read with both of these columns in view.
Three ways to spend a lower rate
A rate drop is a resource, and there are three things you can do with it. You can take the lower payment over a fresh full term, which maximises monthly cash flow and usually costs the most in total. You can match the new term to the years you had left, which is the honest like-for-like comparison and captures the rate saving cleanly. Or you can keep paying exactly what you pay today at the new lower rate, which changes nothing about your budget and shortens the loan dramatically.
The third option is the one the readout highlights, because it is consistently the most valuable and the least chosen. Nothing about your monthly life changes. Every dollar the rate no longer takes goes to principal instead, and because interest is charged on the balance, a faster-shrinking balance compounds the effect. It is the same mechanism as a credit card payoff, running in your favour.
Getting the inputs right
Use the current payoff balance, not the original loan amount — after several years of payments, these differ by less than people expect on a long mortgage, but the difference still moves the result. Enter the years actually remaining, not the original term. For closing costs, include everything the new lender charges plus third-party fees: origination, appraisal, title work, recording, and in some markets a fee to discharge the old mortgage. Under-counting fees is the most common way to make a marginal refinance look worthwhile.
Points deserve a note. Paying points buys a lower rate with cash at closing, so they belong in the closing costs field, with the reduced rate in the new-rate field. The calculator will then show whether the points pay for themselves inside the time you actually expect to keep the loan, which is the only test that matters. If you are likely to move or refinance again before break-even, the answer is no regardless of how good the rate looks.
Everything stays in your browser
Your balance, rate, and term never leave this page. There is no server behind this calculator, no request carrying your numbers anywhere, and no lender waiting for the form. Loan figures are among the most commercially valuable data a person can type into a web page; this one does the arithmetic in your browser and forgets it when you close the tab.
Common questions
- How much lower does the rate have to be to be worth it?
- The old rule of thumb — one full point — is not what decides it. On $320,000 with 28 years left at 7.0% and $6,400 in closing costs, dropping a quarter point to 6.75% saves $52 a month and takes 96 months to break even, for $11,214 over the life of the loan. Half a point, to 6.5%, breaks even in 48 months. A full point, to 6.0%, breaks even in 24 months and is worth $62,934. The break-even is what matters, and it depends on your balance, your remaining term and your actual costs, not on the size of the rate cut alone.
- How much do closing costs push out the break-even?
- Almost exactly in proportion. Holding the rate cut at a full point, which saves $206 a month, $2,000 of costs breaks even in 8 months, $6,400 in 24 months and $14,000 in 53 months. The monthly saving is identical in all three cases — closing costs do not touch it. That is why judging a refinance by the monthly figure gives the same answer whether the deal costs $2,000 or $14,000, when in fact the payback period differs by a factor of six.
- How is break-even calculated here?
- For every month, the calculator adds up what you would have paid plus what you would still owe, on both loans, and finds the first month where the refinance total falls below the stay-put total. That is different from the usual shortcut of dividing closing costs by the monthly saving. The shortcut ignores the balance, so it treats a payment that dropped because the term got longer as if it were pure saving. Including the balance means a stretched term shows up as a later break-even, which is what actually happens to your net worth.
- Why does my monthly payment drop but my total cost go up?
- Because a refinance restarts the term. If you have 22 years left and you refinance into a new 30-year loan, the payment falls partly because of the lower rate and partly because the same balance is spread over 96 more months. Interest is charged on the balance every month it exists, so eight extra years of balance is eight extra years of interest. A lower rate over a longer term can easily cost more in total than a higher rate over a shorter one.
- Should I roll the closing costs into the loan?
- It preserves your cash but it is the more expensive option. Rolled-in costs are borrowed money: at 6% over 30 years, $6,000 of fees costs roughly $12,900 by the time the loan is paid off. Toggle between the two settings and watch the total. Financing the costs makes sense when the cash is worth more to you elsewhere — an emergency fund you would otherwise drain, or higher-rate debt — not because it is cheaper.
- What is the "keep paying today's amount" figure?
- It is how long the new loan takes if you refinance to the lower rate but do not lower your payment. This is usually the best move available and almost nobody takes it. Your monthly outlay does not change, the whole rate saving goes to principal, and the term collapses. Dropping from 6% to 3% on a $300,000 balance with 25 years left ends the loan roughly eight and a half years early, without a single dollar of extra budget.
- What rule of thumb should I use — 1%? 2%?
- None of them. The old "refinance when you can save 1%" rule assumes a fixed relationship between rate, balance, costs, and remaining term that does not hold. On a large balance early in its life, a 0.5% drop can pay for itself in a year. On a small balance with seven years left, even 2% may never cover the fees. Run your own numbers: balance and years left matter as much as the rate gap.
- What is not included in this calculation?
- Property taxes, homeowners insurance, and mortgage insurance are excluded, because they are charged on the house, not the loan, and are mostly unchanged by refinancing — the exception is dropping mortgage insurance, which is a real saving you should add to the monthly figure yourself. Also excluded are the tax treatment of mortgage interest, prepayment penalties on the existing loan, and any rate change on an adjustable loan. If your current loan is adjustable, the payment shown for staying put assumes today's rate holds, which it will not.
Sources
The formulas and rates used by this tool come from the documents below. Rules change; when a figure here disagrees with the source, the source is right.
Figures checked against the sources below on September 1, 2026.
- Loan optionsConsumer Financial Protection Bureau
- Regulation Z §1026.22 — Determination of annual percentage rateConsumer Financial Protection Bureau