Enter your current loan and new rate to see your monthly savings, break-even point, and total interest saved over the life of the loan.
| Metric | Current Loan | New Loan | Difference |
|---|
Estimates only. Closing costs, actual rates, and lender fees vary. Consult a licensed mortgage professional for a formal refinance analysis. Not a loan commitment.
Refinancing replaces your current mortgage with a new one — ideally at a lower rate, a shorter term, or both. The trade-off is that refinancing isn't free: closing costs on a refinance typically run 2-5% of the new loan amount, covering the lender's origination fee, appraisal, title search, and other closing expenses. That means the real question isn't "is the new rate lower," it's "how long will it take the monthly savings to pay back what I spent to get there" — which is exactly what the break-even month above calculates.
As a rule of thumb, refinancing tends to make the most sense when you plan to stay in the home well past your break-even point, when your new rate is at least 0.5-0.75 percentage points lower than your current one, or when you're switching from an adjustable-rate to a fixed-rate loan for payment stability. It rarely makes sense if you're planning to sell or move before you reach break-even.
A fast payment break-even and a rise in total lifetime interest can both be true for the same refinance — and it happens more often than a single break-even number lets on. The reason is term extension: if you've already paid down several years of a 30-year mortgage and refinance into a brand-new 30-year loan, you're financing the remaining balance over 30 years again instead of however many years you actually had left. That new, longer amortization schedule can produce a lower monthly payment and a quick break-even on closing costs, while still adding tens of thousands of dollars in interest over the full life of the loan — because you're paying interest for years longer than you originally would have.
Here's a real example using this calculator's own default numbers — a $320,000 balance at 7.5% with 23 years remaining, refinanced into a new 30-year loan at 6.25% with $6,000 in closing costs:
| Metric | Keep Current Loan | Refinance (30-yr) |
|---|---|---|
| Monthly P&I | $2,436 | $2,007 |
| Time remaining | 23 years | 30 years |
| Break-even on $6,000 closing costs | — | 14 months |
| Total interest paid from today forward | $352,459 | $396,606 |
The monthly payment drops by $429 and the closing costs pay for themselves in just over a year — both genuinely useful outcomes. But because the loan resets to a full 30-year term, total interest paid from today forward rises by roughly $44,000. Neither number is "wrong" — they're answering different questions. The break-even month answers "when do I stop losing money on closing costs?" The total-interest figure answers "what does this refinance cost me if I keep the loan to term?" A homeowner focused on monthly cash flow (a job change, a tight budget year, freeing up money for another goal) may reasonably accept that trade-off. A homeowner focused on paying off the house as fast as possible should weigh it very differently — and could often get the payment relief without the interest cost by refinancing into a term closer to their remaining years (in this example, a 20-year new loan) instead of resetting to 30. Try both terms in the calculator above and compare the "Total Interest" row of the comparison table.
The calculator compares your current loan's remaining payments to a new loan sized to your current balance, plus any cash-out and any closing costs you choose to finance rather than pay upfront. Both the current and new monthly principal-and-interest payments use the standard fixed-rate amortization formula, which derives the payment amount from the loan balance, the monthly interest rate, and the number of remaining payments. Break-even in months is your closing costs divided by your monthly savings — the point at which cumulative savings have repaid what you spent to refinance. Total interest for each loan is the sum of every future payment minus the loan balance, calculated across the full remaining term of the current loan and the full new term of the refinanced loan.
Every refinance decision should start with a stay-horizon estimate: how many more years do you realistically expect to own this home? If you plan to stay well beyond your break-even month, the math is usually straightforward — the savings outlast the cost of getting there. If you might sell or move before break-even, refinancing typically isn't worth it regardless of how attractive the new rate looks, since you'll pay the closing costs without ever recovering them in monthly savings. Between those two extremes is where the total-interest trade-off above matters most: a homeowner planning to stay 10-15 years but not sell should pay close attention to whether a refinance resets the amortization clock, not just whether it lowers next month's payment.
"No-cost refinance" is common lender marketing language, but it doesn't mean the closing costs disappear — it means they're paid a different way. Instead of paying the fees out of pocket at closing, you either roll them into the loan balance (which is what the "Closing Costs" field in this calculator does by default) or accept a slightly higher interest rate in exchange for a lender credit that covers the fees. Both approaches change your math: rolling costs into the balance means you're financing — and paying interest on — the closing costs themselves, while accepting a higher rate lowers your upfront cost but raises your monthly payment and total interest for the life of the loan. Run both versions through the calculator above with your actual numbers before assuming either one is automatically cheaper; the better option depends on how long you plan to keep the loan.
A cash-out refinance replaces your mortgage with a larger loan and gives you the difference in cash — commonly used for debt consolidation, home improvements, or other large expenses. The "Cash-Out Amount" field above adds directly to your new loan balance, which increases both your new monthly payment and your total interest cost on top of whatever the rate-and-term portion of the refinance already changes. Because a cash-out refinance really bundles two decisions together (should I refinance my rate/term, and should I borrow more against my equity), it helps to run the calculator once with $0 cash-out to isolate the pure rate/term trade-off, then again with your intended cash-out amount to see what the extra borrowing actually costs in interest over the loan's life.
This tool estimates principal-and-interest break-even and total interest only. It does not include: discount points (an upfront fee paid to lower your rate, which changes your effective break-even), private mortgage insurance changes if your new loan-to-value ratio crosses the 80% PMI threshold differently than your current loan, appraisal or underwriting outcomes, prepayment penalties on your current loan (rare on conventional mortgages, but worth checking your note), or property tax and homeowners insurance changes that affect your full monthly PITI payment rather than just principal and interest. A licensed loan officer's Loan Estimate will reflect all of these; this calculator is a starting-point comparison, not a substitute for one. It also does not use or estimate today's actual market mortgage rates — enter the rate you were actually quoted, since rates move daily and any figure we hard-coded here would go stale immediately.
Once you have real quotes, the Consumer Financial Protection Bureau's Loan Estimate explainer is a free, government-published resource for reading the standardized 3-page form every lender is required to give you within 3 business days of application. At minimum, compare across every offer: the interest rate and whether it's locked, the monthly principal-and-interest payment, estimated total closing costs, estimated cash needed to close, whether PMI is required and at what monthly cost, and any prepayment penalty. The CFPB specifically recommends getting Loan Estimates from multiple lenders on the same day, since rates can move daily — comparing offers gathered a week apart isn't an apples-to-apples comparison.