Mortgage Refinance Calculator
Monthly savings and break-even point of refinancing your mortgage.
Input sheet
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Refinancing trades closing costs today for a lower payment tomorrow. Whether it pays off comes down to a single number: how many months it takes the savings to repay those upfront costs.
How it works
Both payments amortize the same balance over the new term; the difference is your monthly saving. Closing costs divided by that saving is the break-even point.
Both the old and new payments amortize the same loan balance over the new term, so the difference between them is your monthly saving. Dividing the closing costs by that saving gives the break-even point — the month you start coming out ahead.
Lowering the rate isn't the whole story. Refinancing a loan that's years in into a fresh 30-year term can drop the payment while raising total interest, because you're re-stretching the balance. Watch the payment savings and the break-even together, and consider whether you'll stay in the home past break-even.
Monthly savings = old payment − new payment; Break-even months = closing costs ÷ monthly savings
Worked examples
$300,000 balance, 7% → 5.5%, 30-year term, $4,000 closing costs → ≈ $293/mo saved, break-even ≈ 14 months
The new payment runs about $293 lower per month; $4,000 ÷ $293 ≈ 14 months to recoup the closing costs, after which the savings are pure gain.
Tips & gotchas
- Only refinance if you'll stay in the home past the break-even month — sell or move before then and you've lost money on the closing costs.
- Resetting to a fresh 30-year term lowers the payment but can increase lifetime interest; consider refinancing into a shorter term if your budget allows.
- Roll closing costs into the loan only if you understand it raises the balance and the interest you pay — a 'no-cost' refi usually just hides the fee in a higher rate.
- A rule of thumb is to look at refinancing when rates drop roughly 0.5–1% below your current rate, but always run your own break-even.
FAQ
What counts as closing costs?
Lender fees, appraisal, title insurance, and recording fees, typically totaling 2–5% of the loan. Enter the full estimate so the break-even is realistic.
Is a lower payment always worth it?
Not if it comes from stretching the term rather than a lower rate. Check whether total interest goes up; a lower payment that costs more over time may not serve your goals.
Does refinancing hurt my credit?
The hard inquiry and new account cause a small, temporary dip. The long-term effect is usually negligible if you keep paying on time.
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