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Free online mortgage refinance calculator

Refinancing replaces your existing loan with a new one at a lower rate. This calculator shows monthly savings, months until closing costs pay for themselves, and total interest.

About this calculator

How to use

  1. Enter your current remaining loan balance, interest rate, and the number of months left.
  2. Enter the new interest rate you’ve been quoted and the new loan term in months.
  3. Add all closing costs (origination, appraisal, title, etc.).
  4. Click Calculate refinance to see monthly savings, break-even, and interest totals.

The formula

Monthly payment uses the standard amortization formula:

Payment = P × r × (1 + r)^n / ((1 + r)^n − 1)

Where P is the balance, r is the monthly rate (annual rate ÷ 12), and n is the number of months. Break-even months = closing costs ÷ monthly savings.

Worked example

Balance: $250,000. Current rate: 7% with 300 months left. New rate: 6.5% for 360 months. Closing costs: $4,000.

  • Current payment ≈ $1,766/month
  • New payment ≈ $1,580/month
  • Monthly savings ≈ $186
  • Break-even ≈ 22 months

If you plan to stay more than 22 months, refinancing saves money.

Notes

  • A lower rate doesn’t always mean lower total cost — extending your term can increase total interest paid even if monthly payments fall.
  • This calculator does not account for private mortgage insurance (PMI) changes, tax deductibility of interest, or opportunity cost of closing costs.
  • Cash-out refinances involve borrowing more than the current balance; this calculator models rate-and-term refinances only.

Frequently asked

How is break-even calculated?
Break-even months = closing costs ÷ monthly savings. If you save $150/month and paid $4,500 in closing costs, you break even after 30 months. Stay past break-even and refinancing was a net win.
Should I refinance if rates drop less than 1%?
It depends on how long you plan to stay. A 0.5% rate drop still saves money — the break-even point is just further out. Use the calculator to check whether you'll likely stay past break-even before selling or moving.
Does refinancing restart my loan term?
It can. Refinancing into a new 30-year loan extends your payoff date even if you only have 20 years left. You can choose a shorter term to avoid this, but monthly payments will be higher. The calculator lets you set any new term.
What closing costs should I include?
Typical costs include origination fees, appraisal, title insurance, and prepaid interest: often 2–5% of the loan balance. Ask your lender for a Loan Estimate document, which itemizes every fee.

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