Mortgage Refinance Calculator
Calculate break-even point, monthly savings, and lifetime cost comparison
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Refinance Analysis
Monthly Savings
-$324
Break-Even Point
1.8 yrs
Lifetime Savings
$90,326.29
✅ Excellent - Break even in under 2 years. Refinance is highly recommended.
Quick Start Templates
Current Mortgage
Current Monthly Payment: $2474/month
New Mortgage (Refinance)
Cost: $0
New Monthly Payment: $2149/month
Break-Even Analysis
Time to recover $7,000 in closing costs
Monthly Savings
$324
per month
Total Closing Costs
$7,000
upfront investment
Lifetime Savings
$90,326.29
over loan term
What this means for you:
✅ Excellent - Break even in under 2 years. Refinance is highly recommended.
Excellent opportunity! With a break-even period under 5 years, this refinance makes financial sense if you plan to stay in your home.
Understanding Break-Even
The break-even point is when your monthly savings equal your upfront closing costs. Before this point, you're still "paying off" the refinance. After this point, you're saving money every month. If you sell or refinance again before breaking even, you'll have lost money on this refinance.
Refinance Costs
Typical: 2-6% of loan amount
Total Refinance Costs: $7,000
Cost Comparison
Detailed Comparison
| Metric | Keep Current | Refinance | Difference |
|---|---|---|---|
| Monthly Payment | $2474 | $2149 | -$324 |
| Total Interest | $392,118.157 | $294,791.867 | -$97,326.29 |
| Total Cost | $742,118.157 | $651,791.867 | -$90,326.29 |
| Years to Payoff | 25 years | 25 years | +0 years |
Biweekly Payment Option
Pay half your monthly payment every 2 weeks (26 payments/year = 13 monthly equivalents)
Current Loan - Biweekly
Refinanced Loan - Biweekly
How it works: Instead of making 12 monthly payments, you make 26 biweekly payments (every 2 weeks). This equals 13 monthly payments per year, applying one extra monthly payment toward your principal annually. This accelerates payoff and significantly reduces interest.
Note: Some lenders charge fees for biweekly payment processing. Verify with your lender before committing. You can achieve similar results by making one extra monthly payment per year.
What You'll Learn
- • Four smart reasons to refinance
- • How to calculate your break-even point
- • Typical closing costs and mortgage points
- • Hidden prepayment penalties to watch for
- • When refinancing doesn't make sense
- • Rate-and-term vs. cash-out refinances
- • Eight-point refinance checklist
- • Answers to the most common questions
4 Common Reasons to Refinance
1. Lower Your Interest Rate
Goal: Reduce monthly payment and lifetime interest.
- Best when rates drop 0.5-1%+ below your current rate.
- $350,000 loan @ 7% → 5.5% saves $427/month and $77,000+ over 25 years.
- Aim for break-even in under three years.
2. Shorten Your Loan Term
Goal: Pay off faster and slash interest.
- 30-year → 15-year when cash flow can handle a bigger payment.
- $400,000 loan can save $198,000+ in interest even though payment jumps $580.
- 15-year loans typically carry lower rates.
3. Cash-Out Refinance
Goal: Tap equity for high-impact uses.
- Borrow above current balance to access cash.
- Great for renovations, high-interest debt payoff, major expenses.
- Only worthwhile when you keep equity ≥20% and use funds productively.
4. Convert ARM to Fixed-Rate
Goal: Lock in predictability before a rate hike.
- Refinance an adjustable-rate mortgage before it resets higher.
- Example: 4.5% ARM adjusting to 6.5% → lock 6% fixed.
- Protects budget against future rate shocks.
Understanding the Break-Even Point
Break-Even Formula
Months to Break Even = Total Refinance Costs ÷ Monthly Savings
Example: $7,000 closing costs ÷ $427 monthly savings = 16 months. Stay longer than the break-even to profit from the refinance.
Refinance Closing Costs
Expect to pay 2-6% of the new loan amount. Budget for lender fees, third-party costs, government fees, and prepaid items.
Typical Cost Range
- Lender fees: origination, underwriting, processing ($1,000-$3,000).
- Third-party: appraisal, title insurance, attorney ($1,000-$2,500).
- Government: recording fees, transfer taxes ($100-$500).
- Prepaids: homeowners insurance, property taxes, interest (varies).
On a $400,000 loan: $8k (2%) to $24k (6%), with $16k the national average.
Mortgage Points (Optional)
Buy points to lower your rate — but only if you'll stay long enough.
- Each point costs 1% of the loan and lowers rate ~0.25%.
- $400k loan: 2 points ($8k) drops rate 0.5% and saves $100/month.
- Break-even: $8,000 ÷ $100 = 80 months (6.7 years).
- Worth it when you'll stay 10+ years and have spare cash.
Prepayment Penalties: Hidden Costs
Some mortgages charge fees if you pay off the loan early. Confirm before refinancing:
- Check original loan documents or ask your lender directly.
- Typical penalty: 2% of balance in years 1-2, 1% in years 3-5, none after year 5.
- Example: 2% penalty on $350,000 costs $7,000 — potentially wiping out your savings.
When NOT to Refinance
Moving Soon
If you plan to sell within 2-5 years, you likely won't break even before you move.
Late in Your Mortgage
After 20+ years, most payments go to principal. Refinancing resets amortization and can increase lifetime interest.
Credit Took a Hit
Credit score requirements: conventional 620+, FHA 580+, VA flexible. Lower scores mean worse rates.
Little Equity
Lenders want 20% equity to avoid PMI. With less equity, monthly costs rise.
Rate-and-Term vs. Cash-Out
Rate-and-Term Refinance
- Refinance for same balance (or less) to lower rate or change term.
- Aim: smaller payment, less interest, faster payoff.
- Closing costs 2-4% of loan.
- Ideal when rates fell, you want fixed rate, or need shorter term.
Cash-Out Refinance
- Borrow more than you owe and pocket the difference.
- Best for renovations, high-interest debt, tuition, business capital.
- Closing costs 3-6% plus you're increasing your balance.
- Use only when ROI is high and you maintain healthy equity.
Refinance Decision Checklist
Frequently Asked Questions
Common questions about the Mortgage Refinance Calculator
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⚠️ Important Disclaimer
This Mortgage Refinance Calculator provides estimates for educational and informational purposes only. Actual results may vary significantly based on individual circumstances, market conditions, regulatory changes, and other factors beyond the scope of this calculator.
The calculations and projections provided are based on assumptions and historical data that may not reflect future performance.Past performance does not guarantee future results.
This tool is not financial advice, tax advice, legal advice, or investment advice. For personalized guidance tailored to your specific situation, please consult with qualified professionals including:
- Certified Financial Planner (CFP)
- Certified Public Accountant (CPA) for tax matters
- Licensed attorney for legal matters
- Registered Investment Advisor (RIA) for investment decisions
Data Accuracy: All data sources, statistics, and rates were verified as accurate as of October 2025. Tax rates, market conditions, and other financial data change over time. Always verify current rates and consult official sources.
No Warranties: While we strive for accuracy, we make no warranties or guarantees regarding the accuracy, completeness, or reliability of any information provided. Use this tool at your own risk.