Mortgage Refinance Calculator
Enter your current and new rate — see your monthly savings, break-even timeline on closing costs, and total interest saved over your expected stay.
How to Calculate Your Refinance Break-Even
- The break-even point is when your cumulative monthly savings equal the closing costs you paid upfront. Divide total closing costs by your monthly payment reduction to get the number of months to break even.
- A common rule of thumb: refinancing makes financial sense if you lower your rate by at least 1% and plan to stay in the home longer than your break-even period — typically 2–4 years.
- Cash-out refinances work differently — you're borrowing against equity, so the math includes the new, larger loan balance and potentially a higher rate than a simple rate-and-term refi.
Calculation details
Methodology
The calculator estimates the payment on the current remaining balance and compares it with the proposed new loan. Monthly payment savings are measured against entered refinance costs; simple break-even equals upfront costs divided by monthly savings. Long-term comparisons also account for the new term and projected interest.
Assumptions and limitations
- Closing costs, financed fees, cash taken out, and the new loan term must be entered accurately for a meaningful comparison.
- A lower monthly payment can result from extending the payoff date rather than from lower total borrowing cost.
- Taxes, insurance, future moves, another refinance, and the opportunity cost of upfront cash can change the decision.
Worked example: refinance break-even
- Current principal-and-interest payment: $2,100
- Proposed principal-and-interest payment: $1,900
- Upfront refinance costs: $6,000
Monthly savings: $200; simple break-even: 30 months
The borrower recovers $6,000 after 30 months of $200 savings. Staying beyond break-even is necessary but not sufficient: compare the remaining balance, total interest, and payoff date too.
Official sources
- Consumer Financial Protection Bureau — refinancing: Highlights payment, term, fees, and break-even considerations.
- Consumer Financial Protection Bureau — Loan Estimate: Explains the standardized form used to compare proposed loan terms and costs.
Frequently Asked Questions
When does it make sense to refinance a mortgage?
Refinancing generally makes sense when you can lower your rate by at least 0.5%–1%, you plan to stay in the home long enough to recoup closing costs (your break-even period), and the new loan doesn't reset too much of your amortization progress. The break-even calculator above shows exactly how long it takes to come out ahead.
How much does it cost to refinance a mortgage?
Refinance closing costs typically run 2%–5% of the loan amount — roughly $6,000–$15,000 on a $300,000 loan. Common fees include origination, appraisal (~$400–$600), title insurance, and recording fees. Some lenders offer 'no-closing-cost' refis where costs are rolled into the rate, which makes sense if you plan to sell or refinance again within a few years.
What is a refinance break-even point?
The break-even point is the number of months it takes for your cumulative monthly savings to equal the upfront closing costs. For example, if you pay $6,000 in closing costs and save $200/month, your break-even is 30 months. If you plan to stay in the home more than 30 months, refinancing is financially beneficial.
Does refinancing reset my 30-year mortgage?
Only if you choose a new 30-year term. If you've already paid 7 years on a 30-year mortgage, refinancing into another 30-year loan restarts the clock — you'd be paying for 37 years total. To preserve your payoff timeline, refinance into a term matching your remaining years (e.g., a 23-year term), or choose a 15-year loan to pay it off faster.
What credit score do I need to refinance?
Conventional refinances typically require a minimum 620 credit score, though 740+ unlocks the best rates. FHA streamline refinances can be done with scores as low as 580. VA and USDA streamline programs often have no minimum score requirement. A higher credit score directly reduces your interest rate, so it's worth waiting if your score is improving.
How to use this estimate
This calculator is an educational planning tool. Results are based on the figures and assumptions entered by the reader, use standard mortgage mathematics, and are not a loan offer, approval, or substitute for a lender's Loan Estimate. Taxes, insurance, fees, mortgage insurance, and available rates vary by borrower, property, lender, and location.
Review the assumptions, compare more than one scenario, and confirm the final numbers with a licensed mortgage professional before making a financial commitment.