What is a refinance break-even point?

It is the time it takes for your monthly savings to recover your refinance costs. It is calculated as total costs divided by monthly savings.

Should I roll closing costs into the loan?

Rolling costs increases your loan amount and the interest paid on those costs. Paying upfront avoids that interest but requires cash at closing.

Are taxes and insurance included?

The calculator focuses on principal and interest. Property taxes and insurance usually do not change after refinancing and are excluded for a clean apples-to-apples comparison.

Do discount points change the APR?

Points are prepaid interest. They reduce the nominal rate but increase upfront cost, which effectively raises APR if paid upfront. This tool includes points in the total cost and break-even math.

Can I model a 0% interest loan?

Yes. If the interest rate is 0%, the payment equals principal divided by months. The calculator handles this edge case.

No. This is an educational tool. Consult a qualified mortgage professional to evaluate your specific situation.

Mortgage Refinance Calculator

Quickly evaluate whether refinancing your mortgage could save you money. Enter your current loan details, propose new terms, and this calculator will estimate your new monthly payment, monthly savings, break-even time, and lifetime interest savings. Built for homeowners and professionals who want rigorous, transparent results.

Calculator

Current remaining balance

Remaining term — years

Remaining term — months

Current interest rate (APR)

New interest rate (APR)

New term (years)

Estimated closing costs

Discount points (%)

Cash-out amount

Roll costs into loan Pay costs upfront

Choosing “Roll costs” increases the loan amount and interest paid on those costs.

Assumptions: fixed-rate loans, monthly compounding, payments at month-end, P&I only (taxes/insurance excluded).

Results

Current monthly payment (P&I)

$0.00

Based on remaining balance, remaining term, and current APR.

New monthly payment (P&I)

$0.00

Includes rolled-in costs if selected.

Monthly savings

$0.00

Positive values indicate a lower monthly payment.

Break-even time

—

Months to recover total refinance costs from monthly savings.

Lifetime interest: current vs new

$0 vs $0

Interest remaining on current vs interest on new loan.

Net lifetime savings after costs

$0.00

Total payment on current loan minus (new loan payments + any upfront costs).

Data Source and Methodology

Authoritative data source: Consumer Financial Protection Bureau (CFPB), “Owning a Home – Understand loan estimates and mortgage costs,” last updated 2024. Direct link: https://www.consumerfinance.gov/owning-a-home/. All calculations are strictly based on the standard fixed-rate amortization formulas described by CFPB and classical annuity mathematics.

Supplemental reference: Federal Reserve Board, “Mortgage Refinancing,” accessed 2024. Link: federalreserve.gov/consumerscommunities/mortgage-refinancing.htm. All calculations are strictly based on the formulas and data provided by this source.

The Formula Explained

Monthly payment: M = P \cdot \frac{i}{1 - (1 + i)^{-n}}, \quad i = \frac{r}{12}

If r = 0: \quad M = \frac{P}{n}

Remaining balance after k payments: B_k = P_0 (1+i)^k - M \cdot \frac{(1+i)^k - 1}{i}

Break-even (months): \quad N_{BE} = \left\lceil \frac{C_{refi}}{\max(M_{current} - M_{new}, 0)} \right\rceil

Glossary of Variables

Remaining balance (P): principal still owed on the current loan.
Annual rate (r): nominal annual percentage rate (APR) as a percentage (e.g., 6.5).
Monthly rate (i): r/12 expressed as a decimal (e.g., 0.065/12).
Term (n): number of monthly payments.
Discount points: prepaid interest charged as a percent of loan amount (1 point = 1%).
Closing costs (C_refi): non-point costs (lender, title, appraisal, etc.).
Current payment (M_current): P&I payment for remaining balance and remaining term at current rate.
New payment (M_new): P&I payment for the new refinance loan amount, rate, and term.
Break-even time: months required for monthly savings to cover total refinance costs (points + closing).
Lifetime interest (current/new): total interest payable over the remaining term / new term.
Net lifetime savings: total remaining payments on current loan minus (new loan payments + any upfront costs).

How It Works: A Step-by-Step Example

Come Funziona: Un Esempio Passo-Passo

Suppose your remaining balance is $280,000 with 23 years and 6 months left (282 months) at 6.75% APR. You can refinance to 5.25% APR for 30 years (360 months) with $3,500 in closing costs and 0 points, paying costs upfront.

Compute current payment with P = 280,000, r = 6.75% ⇒ i = 0.0675/12, n = 282: M_current = P · i / (1 - (1+i)^(-n)).
Compute new payment with P_new = 280,000 (no cash-out, costs not rolled), r_new = 5.25% ⇒ i_new = 0.0525/12, n_new = 360: M_new = P_new · i_new / (1 - (1+i_new)^(-n_new)).
Monthly savings = M_current − M_new.
Break-even months = ceil(3,500 / monthly savings).
Lifetime interest (current) = M_current · 282 − 280,000; (new) = M_new · 360 − 280,000.
Net lifetime savings = (M_current · 282) − (M_new · 360 + 3,500).

If you choose to roll costs into the loan, P_new increases by $3,500 (plus any points), slightly increasing M_new and lifetime interest.

Frequently Asked Questions (FAQ)

What fees are included in “closing costs” here?

Lender origination, underwriting, appraisal, title, recording, credit report, and similar third-party fees. Escrow deposits and prepaid taxes/insurance are excluded.

Is refinancing worth it if my monthly savings are small?

Small monthly savings may still be worthwhile if your break-even is short and you plan to keep the home beyond that period. Consider both monthly cash flow and lifetime interest impacts.

Why can lifetime interest increase even when the rate is lower?

Extending the term can increase total interest paid despite a lower rate. Compare both monthly savings and lifetime interest to make an informed decision.

How are discount points treated?

Points are calculated as a percentage of the base loan amount (current balance + cash-out). If rolled into the loan, they increase principal; if paid upfront, they are added to upfront costs and affect the break-even calculation.

Can I include taxes and insurance?

For clarity, this tool focuses on principal and interest (P&I). Taxes and insurance are generally unaffected by refinancing and are excluded from the comparison.

Does the calculator consider prepayment penalties?

No. If your current loan has a prepayment penalty or other payoff fees, add them to closing costs for a conservative estimate.

Will this match my lender’s Loan Estimate?

It will be close under the same assumptions. Your lender’s official Loan Estimate will reflect precise fees, credits, and rate/points you qualify for.

Tool developed by Ugo Candido. Content verified by CalcDomain Editorial Team.
Last reviewed for accuracy on: September 13, 2025.