Refinance calculator
Whether refinancing your mortgage saves money, and when it breaks even.
About this calculator
Should you refinance? This refinance calculator compares your current mortgage with a new loan at a lower rate or a different term.
It shows the change in monthly payment, how long the closing costs take to pay back, and whether you save money over the life of the loan.
How it works
Compares the payment and remaining interest on your current loan with a new loan for the same balance. The break-even point is the closing costs divided by the monthly saving.
Last reviewed:
Worked example
- Current loan balance: $250,000
- Current interest rate: 7% a year
- Years left on the loan: 25 years
- New interest rate: 5.75% a year
- New term: 25 yr
- Closing costs: $4,000
Monthly saving: $194.18
Common questions
When is refinancing worth it?
When the saving pays back the closing costs well before you expect to sell or pay off the home. A common rule of thumb is a rate drop of at least half to one percentage point.
What are closing costs on a refinance?
Fees for the new loan, such as the lender's charges, an appraisal and title costs. They are often 2% to 5% of the loan, and can sometimes be added to the balance.
Can refinancing cost more even with a lower payment?
Yes. Starting a new 30-year term can lower the payment but add years of interest. Compare the lifetime figure as well as the monthly one.
Sources and further reading
The story behind it
Where the idea came from: US homeowners refinanced in record numbers in 2020 and 2021, when mortgage rates fell to all-time lows.
Refinancing waves follow falling interest rates: each time rates drop, millions of borrowers swap their loan for a cheaper one. The question is always the same: will the saving cover the cost of switching? This calculator answers it with your own numbers.
Why you can trust this calculator
- It runs in your browser. Nothing you type into it is sent anywhere.
- The method is explained on this page, so you can check it yourself.
- Free to use, with no sign-up.
- Results are estimates, not financial advice.
- Spotted a mistake? Tell us and we'll look into it.
After 15 years as a mathematics educator, I built CalculStore to give students, teachers, professionals and anyone working with numbers simple, reliable tools.
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