Should you refinance? Compare your current loan to a new rate and see your savings, break-even point, and total interest saved.
This calculator compares your current mortgage against a potential refinance to determine whether refinancing saves you money. Enter your current loan details (remaining balance, interest rate, years remaining) and the proposed new loan terms (new rate, new term, closing costs). The calculator shows your monthly savings, total interest savings over the life of the loan, the break-even point (how many months until closing costs are recouped), and a month-by-month comparison.
Start with your most recent mortgage statement. Enter your remaining balance, current interest rate, and how many years are left on your loan. Then enter the new interest rate you have been quoted, the new loan term you are considering, and estimated closing costs (typically 2-5% of the loan amount). The calculator handles all the amortization math and shows you whether refinancing makes financial sense given your timeline.
Refinancing is usually worth it when your break-even point is under 24 months and you plan to stay in the home for several more years beyond that. The break-even point is the number of months it takes for your monthly savings to recoup the closing costs. If you plan to sell or move before the break-even point, refinancing will cost you more than it saves. Other good reasons to refinance include dropping PMI (if you now have 20%+ equity), switching from an adjustable rate to a fixed rate, or shortening your loan term to save on total interest.
If you are 7 years into a 30-year mortgage and refinance into a new 30-year loan, you have added 7 years of payments back onto your timeline. This happens because mortgages are front-loaded with interest. By year 7, you are finally making real progress on principal. A new 30-year term resets the amortization schedule. The fix is to refinance into a term that roughly matches your remaining years, for example a 20-year loan instead of a new 30-year. The Amortization Calculator can show you the full payment breakdown for any scenario.
Refinance closing costs typically run 2-5% of the loan amount and include loan origination fee (0.5-1%), appraisal ($400-700), title insurance ($700-1,500), recording fees, and prepaid items. "No-closing-cost" refinances roll these into a higher rate, which often costs more over the life of the loan than paying upfront. Always compare both options using total cost over the period you expect to keep the loan.
The break-even point is the only number that matters. Divide your total closing costs by your monthly savings. If you get 24 months and you're staying in the house for 5+ more years, it's a clear win. If the break-even is 48+ months, think carefully about whether you'll actually stay that long.
Watch out for the term trap: refinancing into a new 30-year mortgage when you're 8 years into your current one adds 8 years of payments. Match the new term to your remaining years whenever possible. A 20-year or 15-year refi keeps you on track while lowering your rate. For the full decision framework, see our guide on whether to refinance your mortgage.