Refinance Calculator
Compare your current mortgage with a new loan, see monthly savings, break-even point, and total interest savings before you refinance.
Current mortgage
Used to estimate remaining term and interest if you keep your current loan.
New refinance loan
Include lender fees, appraisal, title, and other closing costs.
How this refinance calculator works
This refinance calculator compares your existing mortgage with a potential new loan. It estimates:
- Your current monthly principal & interest payment.
- Your new monthly payment at the refinance rate and term.
- Monthly savings (or increase) from refinancing.
- Total interest you would pay if you keep your current loan vs. refinance.
- Your break-even point based on closing costs and monthly savings.
- How your payoff date changes, including the effect of extra payments.
Key formulas used
The calculator uses the standard fixed-rate mortgage payment formula.
Monthly payment (principal & interest):
Let:
- \( P \) = loan principal (amount borrowed)
- \( r \) = monthly interest rate = annual rate / 12
- \( n \) = total number of monthly payments (years × 12)
Then the monthly payment is:
\[ M = P \cdot \frac{r(1+r)^n}{(1+r)^n - 1} \]
Remaining balance after \( k \) payments on a fixed-rate loan:
\[ B_k = P(1+r)^k - M \cdot \frac{(1+r)^k - 1}{r} \]
We use this to estimate your remaining balance and remaining term on the current mortgage.
Total interest over the remaining life of a loan is:
\[ \text{Total Interest} = M \cdot n - P \]
Break-even point in months is:
\[ \text{Break-even (months)} = \frac{\text{Closing Costs}}{\text{Monthly Savings}} \]
We convert this to years and months for easier interpretation.
How to read your refinance results
1. Monthly payment comparison
The first card shows your current vs. new monthly principal & interest payment and the difference. A lower payment can improve cash flow, but if you extend your term significantly you might pay more interest overall.
2. Total interest savings
This is the most important long-term metric. It compares the total interest you would pay if you keep your current loan versus refinancing (including any rolled-in closing costs). A positive number means refinancing reduces your lifetime interest cost.
3. Break-even point
The break-even point tells you how long it takes for your monthly savings to recover the upfront refinance costs. If you plan to sell or move before this time, refinancing may not be worthwhile.
4. Payoff date impact
Refinancing into a new 30-year term when you already have, for example, 25 years left will usually extend your payoff date. You can avoid this by choosing a shorter term (like 15 or 20 years) or by making extra principal payments.
5. Extra payments
Turning on the extra payment option shows how much faster you could pay off the refinance loan and how much additional interest you would save. Even a modest extra payment each month can shave years off your mortgage.
When does refinancing make sense?
- You can lower your rate by ~0.5–1.0 percentage point or more.
- You plan to keep the home beyond the break-even period.
- You are not dramatically extending your loan term (unless your main goal is cash flow relief).
- You want to switch from an ARM to a fixed rate for stability.
- You want to shorten your term (e.g., 30-year to 15-year) and can afford the higher payment.
Limitations and assumptions
- Assumes a standard fixed-rate mortgage with level payments.
- Assumes payments are made monthly and on time.
- Does not model prepayment penalties, points, or tax effects.
- Property taxes, insurance, and HOA are treated as fixed monthly amounts.
This tool is for educational purposes only and does not constitute financial advice. Always review actual lender offers and consider speaking with a qualified mortgage professional before refinancing.
Frequently asked questions
How accurate is this refinance calculator?
The math for payments, interest, and break-even is the same as lenders use for fixed-rate loans. However, your actual costs can differ based on points, fees, and specific loan features. Use this as a planning tool, then compare it with official loan estimates from lenders.
Should I refinance to a longer term to lower my payment?
Extending your term (for example, from 25 years remaining back to 30 years) can significantly reduce your monthly payment, but usually increases total interest paid. This can still be reasonable if you need cash flow relief, but consider making extra payments later when your budget allows.
What if my refinance payment is higher but I still save interest?
If you refinance into a shorter term (like 15 years), your monthly payment may go up even at a lower rate. In that case, you are trading higher monthly payments for a much faster payoff and lower total interest. The calculator will show this as negative “monthly savings” but positive “total interest savings.”