Mortgage Refinance Calculator
Calculate monthly savings, break-even month, and lifetime savings from refinancing your mortgage.
Enter current and new loan details to see if it makes sense.
Mortgage refinancing replaces your current home loan with a new one — ideally at a lower interest rate. The key question is: how many months until the monthly savings offset the closing costs you paid to refinance?
Break-Even Formula: Break-Even Months = Total Closing Costs ÷ Monthly Payment Savings Monthly Payment Savings = Old Monthly Payment − New Monthly Payment
Monthly Payment Formula: M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
- P = loan principal
- r = monthly interest rate (annual rate ÷ 12)
- n = number of payments (years × 12)
Net Interest Savings over Remaining Term: Net Savings = (Old Total Remaining Payments − New Total Payments) − Closing Costs
What each variable means:
- Closing Costs — typically 2–5% of the loan amount: origination fees, appraisal, title insurance, attorney fees, prepaid interest.
- Rate Reduction — even 0.5% can save tens of thousands over 30 years on a large mortgage.
- Remaining Loan Term — if you are 10 years into a 30-year mortgage, you have 20 years left.
The “2% rule” (simplified heuristic): Refinancing is generally worth it if you can lower your rate by at least 0.5–1% and plan to stay in the home past the break-even point.
Worked example: Current loan: $280,000 remaining, 7.25%, 25 years left → payment = $2,018/month New loan: $280,000, 6.25%, 25 years → payment = $1,855/month Monthly savings = $2,018 − $1,855 = $163/month Closing costs = $6,200
Break-Even = $6,200 ÷ $163 = 38 months (3.2 years)
If you plan to stay more than 3.2 years, refinancing is beneficial. Net savings over 25 years = ($163 × 300 months) − $6,200 = $42,700.