Mortgage Refinance Calculator

Mortgage Refinance Calculator

This calculator compares your current mortgage against a new refinanced loan to reveal monthly savings, total lifetime savings, and the critical break-even point. Enter your current balance and rate alongside the new rate and closing costs to determine whether refinancing makes financial sense for your situation.

How Refinance Savings Are Calculated

Both the current and new monthly payments use the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1]. The calculator then compares total costs:

• Monthly Savings = Current Payment - New Payment
• Lifetime Savings = (Current Total Cost) - (New Total Cost + Closing Costs)
• Break-Even Point = Closing Costs / Monthly Savings

The break-even point tells you how many months it takes for your monthly savings to recoup the upfront closing costs.

Example

Key Factors That Affect Refinancing

• Rate difference — a drop of at least 0.75-1.0% typically justifies the closing costs
• Closing costs — typically 2-5% of the loan balance; higher costs mean a longer break-even period
• New loan term — a shorter term increases the monthly payment but saves significantly on total interest
• How long you plan to stay — refinancing only pays off if you stay past the break-even point
• Remaining term — refinancing late in a mortgage may reset the amortization clock unfavorably

Tips

1. Only refinance if you plan to stay in the home past the break-even point, otherwise you lose money on closing costs
2. Consider a 15 or 20-year term when refinancing to avoid resetting to a full 30-year schedule
3. Request a Loan Estimate from at least three lenders to compare closing costs and rates
4. Factor in property taxes and insurance changes, which may also shift when you refinance