Compare your current mortgage vs refinance options. Calculate monthly savings, breakeven point, closing costs, and total interest difference.
| Year | Current Bal | New Bal | Cur Interest | New Interest |
|---|---|---|---|---|
| 1 | $315494 | $315279 | $20667 | $15893 |
| 2 | $310686 | $310316 | $20366 | $15651 |
| 3 | $305557 | $305100 | $20044 | $15397 |
| 4 | $300083 | $299616 | $19700 | $15130 |
| 5 | $294243 | $293852 | $19333 | $14850 |
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A rate-and-term refinance replaces your existing mortgage with a new one, so there are two separate things to compare. The first is the payment delta: the new loan re-amortises your balance at a lower rate, usually over a fresh term, which is what produces the smaller monthly cheque. The second is the break-even point: closing costs are real cash you pay today, so the refinance only becomes a net win once the accumulated monthly savings have paid them back. This calculator prices both loans with the standard amortisation formula, divides closing costs by the monthly saving to get the break-even month, and then runs a five-year side-by-side of the two balances so you can see whether the lower rate also retires principal faster. Note that a longer new term can lower the monthly payment while raising total interest — always read the total-payments row, not just the monthly delta.
Top: the new payment is $379.95/month lower. Bottom: that saving accumulates on a straight line; the month it crosses the horizontal closing-cost line is the break-even point (month 12 here). Everything after the crossing is net gain, everything before it is still money out of pocket.
The Nguyen family has $320,000 left on a 6.5% loan with 27 years to run. A lender quotes 5.0% on a new 30-year term with $4,500 of closing costs, paid upfront rather than rolled into the loan.
Calculate if refinancing your mortgage saves money. Compare rates, closing costs, break-even point, and total savings. Free, no signup.
This calculator answers the refinance question with the two numbers that decide it: monthly savings and break-even point. Enter your current loan balance, rate, and remaining term alongside the new rate, term, and closing costs, and the tool computes the payment difference, the months until cumulative savings repay the closing costs, and total interest saved or added across the new loan's life. A cash-out mode shows the new balance and payment when equity is withdrawn, and a term-change view exposes the tradeoff refinancing hides — restarting a 30-year clock can lower the payment while increasing lifetime interest.
Homeowners watching rate drops decide whether the move clears their personal bar — the break-even test against how long they will stay. Borrowers with improved credit or income since purchase price their realistic new rate rather than advertised teasers. People ending PMI or ARM fixed periods evaluate fixed-rate conversions. Cash-out planners size renovations or consolidations against the higher balance and longer clock. Anyone considering a 15-year refinance sees both the payment increase and the dramatic interest savings in one view.
(1) Enter current loan details: balance, rate, and months remaining. (2) Enter the refinance offer: new rate, new term, and total closing costs — typically 2–5% of the loan. (3) The engine computes new payment, monthly savings, and break-even months = closing costs ÷ monthly savings. (4) Total-cost view shows lifetime interest under each scenario, and cash-out mode adjusts the balance for withdrawn equity; arm all three against how long you plan to keep the home.
The universal test is break-even versus time-in-home: if closing costs are $5,000 and you save $180 monthly, you break even at 28 months — worthwhile if staying five years, marginal if a move is likely in two. Beyond the headline, three subtleties decide real value. Rate spread: the old 1-point-gap rule of thumb understates opportunity at high balances — on a $500,000 loan, even 0.5% saves $160+ monthly, breaking even within two years. Term reset: refinancing a 7-year-old 30-year loan into a new 30-year lowers payment partly by re-extending the clock, adding lifetime interest — compare like-for-like by pricing the new loan at your remaining term or shorter; the 15-year option often wins dramatically on total interest. No-cost refinances fold closing costs into a slightly higher rate: fine when savings still clear your bar, since they convert the decision into pure monthly arithmetic. Finally, PMI resets matter — refinancing above 80% LTV can reintroduce mortgage insurance that erases the savings; check the LTV before the rate.
Divide your closing costs by the monthly payment savings: a $4,800 closing cost with $160/month saved breaks even in month 30. The calculator computes this breakeven month automatically and plots cumulative savings crossing the closing-cost line, so you can instantly see whether you will stay in the home long enough to profit.
Not necessarily. A refinance usually re-amortises your balance over a fresh term, so a lower rate on a longer new term can shrink the monthly payment while raising total interest paid over the life of the loan. The five-year side-by-side balances in this calculator show whether the lower rate also retires principal faster — read the total-payments row, not just the monthly delta.
Include lender fees, appraisal, title insurance, recording, and any discount points — typically 2–5% of the loan amount on a US refinance. Enter your Loan Estimate figure for precision. The breakeven math is only as good as this input, so use the actual estimate rather than a rule of thumb when you have one.
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