Mortgage refinance calculator
Refinancing changes two things at once — your rate and often your remaining term. See your new payment, exactly how many months it takes to recoup the closing costs, and whether you actually save on total interest or just lower the monthly bill.
Current monthly payment
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New monthly payment
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Monthly savings
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Break-even on closing costs
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Last updated: September 2026 · Verified by Hugo Cardozo.
Two separate questions in one decision
Refinancing really asks two questions at once: does the new monthly payment make sense, and does the new loan cost less in total interest over its full life? A lower payment can still cost more in total interest if it resets the clock on a long term — this calculator answers both questions side by side instead of just the monthly one.
The break-even point is what actually matters
Closing costs on a refinance (appraisal, origination fees, title, and other charges) typically run 2-5% of the loan amount. Dividing those costs by your monthly savings gives the break-even point — the number of months before the refinance has paid for itself. If you plan to sell or refinance again before reaching that point, the refinance may not be worth it regardless of how good the new rate looks.
Worked example
A $280,000 balance at 7% with 27 years remaining has a payment of about $1,926/month. Refinancing to 6% on a new 30-year term drops the payment to about $1,679/month — a savings of $247/month. With $5,000 in closing costs, the break-even point is about 20 months. Even though the term resets to a full 30 years, the lower rate still saves roughly $19,600 in total interest over the life of the new loan compared to finishing out the original loan.
Watch the term, not just the rate
Resetting to a new 30-year term after already paying down several years of a loan extends how long you're in debt overall, even when the rate drops. Choosing a shorter new term (matching or beating your remaining years) usually raises the monthly payment somewhat but avoids restarting the amortization clock — worth comparing both a like-term and a full-term refinance before deciding.
Frequently asked questions
Is it worth refinancing for less than a 1% rate drop?
It depends entirely on the break-even math specific to your loan and closing costs — a smaller rate drop on a large balance can still be worthwhile, while the same drop on a small balance or high closing costs might not clear the break-even point before you'd move or refinance again.
Can closing costs be rolled into the new loan instead of paid upfront?
Yes — many lenders allow this ("no-cost" refinancing), but it increases the new loan balance and the interest paid on it, which changes both the new payment and the true break-even point. This calculator assumes closing costs are paid upfront; rolling them in would need to be added to the loan balance instead.
Does refinancing reset my mortgage interest deduction or escrow account?
Escrow typically gets rebuilt with the new loan (sometimes requiring an initial deposit), and mortgage interest remains deductible under the same general tax rules as before, subject to current IRS limits — this calculator focuses on the payment and interest math, not tax treatment, which is worth confirming with a tax professional for your specific situation.
📘 Related guide
Read the full guide: "Mortgage Refinancing: When It's Actually Worth It".
Mortgage Refinancing: When It's Actually Worth It