How does the refinance calculator work?

It amortizes your current loan balance over the new term at the new APR to get your new monthly payment, then subtracts it from your current payment to show your monthly savings, break-even point and estimated lifetime interest savings.

Should I refinance if it extends my loan term?

A longer term lowers your monthly payment but can increase total interest paid over the life of the loan. Compare both the monthly savings and the estimated lifetime savings before deciding.

How much does it cost to refinance a mortgage?

Refinance closing costs usually run about 2 to 5 percent of the loan amount and cover lender fees, the appraisal, title work and other charges. Enter your quoted closing costs to see how many months of savings it takes to recover them.

Refinance Calculator: Mortgage Savings & Break-Even

Use this free mortgage refinance calculator to see whether a new rate is worth it. Enter your current loan and a new rate to get yournew monthly payment, refinance savings, break-even point andestimated lifetime interest savings instantly.

What is a refinance calculator?

A refinance calculator compares your current mortgage to a new loan so you can see, in dollars, whether refinancing pays off. Instead of guessing, you plug in your balance, your current rate and a rate you have been quoted, and this mortgage refinance calculator returns your new monthly payment, your refinance savings each month, the break-even point on closing costs and your estimated lifetime interest savings. It is the fastest way to answer the question most homeowners ask: is refinancing worth it for me?

How to use the mortgage refinance calculator

Current loan balance, how much you still owe on your mortgage today.
Current APR, the annual interest rate on your existing loan.
Current monthly payment, your principal-and-interest payment only (leave out property taxes and homeowners insurance).
New APR, the interest rate you have been quoted for the refinance.
New term, the length of the new loan in years, such as 15 or 30.
Closing costs, lender fees, appraisal, title and other costs to refinance. Use 0 for a no-cost estimate.

The results update the moment you change a number, so you can try different rates and terms to see what makes the most sense.

How to calculate your refinance savings

Your new monthly payment is calculated by amortizing your current balance over the new term at the new rate. Your refinance savings each month is simply your old payment minus the new one. The break-even pointtells you how many months of those savings it takes to recover your closing costs. If you plan to keep the home longer than that, the refinance generally pays off.

The estimated lifetime savings compares the interest you would still pay on your current loan against the total interest on the new loan, then subtracts your closing costs. A positive number means you save money over the life of the loan. A negative number is common when a refinance stretches the payoff date far into the future, even if your monthly payment drops.

Refinance example

Say you owe 250,000 dollars at 7 percent with a 1,750 dollar monthly payment, and you can refinance into a 30-year loan at 5.5 percent with 5,000 dollars in closing costs. The new payment falls to roughly 1,419 dollars, a refinance savings of about 331 dollars a month. At that pace you recover the 5,000 dollars in closing costs in about 15 months, so anyone planning to stay in the home past that break-even point comes out ahead.

When refinancing makes sense

Rates have fallen: a meaningfully lower APR is the most common reason to refinance.
You will stay put: if you will own the home well past the break-even point, the closing costs are worth it.
You want a shorter term: moving from a 30-year to a 15-year loan can slash total interest, even if the monthly payment rises.
You need lower payments now: extending the term lowers the monthly cost, though it can raise lifetime interest.

Always weigh the monthly refinance savings against the lifetime savings: a lower payment is not always a cheaper loan.

Frequently asked questions

How does a refinance calculator work?

It uses the standard amortization formula on your current balance, the new monthly interest rate and the number of months in the new term to find your new payment, then compares it to your current loan to show your refinance savings, break-even point and lifetime interest savings.

What is the break-even point on a refinance?

It is how many months it takes for your monthly refinance savings to add up to your closing costs. After that month, the refinance is ahead and every payment is money saved.

Why are my lifetime refinance savings negative?

Extending your loan term can mean more total interest even when the monthly payment drops. The lifetime figure captures that trade-off after closing costs, so a lower payment can still add up to a more expensive loan.

Is refinancing worth it for a small rate drop?

It depends on your closing costs and how long you will keep the home. Enter your numbers above: if you will own the home well past the break-even point, even a small rate cut can be worth it.

This tool is for general information only and is not financial advice. Confirm all figures with your lender.