Refinance Calculator: Should You Refinance Your Mortgage?
Refinance calculator
See whether refinancing your mortgage is worth it. Compare your current loan with a new one to find your monthly savings, your break-even point, and the difference in total interest paid.
- Free to use
- No sign-up
- Shows your break-even point
Your current loan
The new loan
Side-by-side comparison
How this calculator works
Both payments use the standard amortizing-loan formula. Monthly savings is your current payment minus the new payment. The break-even point is your refinance costs divided by the monthly savings — how many months it takes for the savings to repay the cost of refinancing.
Watch the term carefully: a lower rate spread over a longer term can shrink your monthly payment while raising the total interest you pay. Check the lifetime interest difference, not just the monthly number.
Frequently asked questions
What is a break-even point in refinancing?
It’s how long it takes for your monthly savings to cover the upfront cost of refinancing. If you plan to stay in the home past the break-even point, refinancing usually pays off.
Is a lower monthly payment always better?
Not necessarily. Extending your term can lower the payment but increase total interest over the life of the loan. Look at the lifetime interest difference too.
What costs are involved in refinancing?
Typical costs include lender fees, appraisal, title, and closing costs — often 2–6% of the loan amount. Enter your estimated total in the refinance costs field.
Estimates only and not financial advice. This is not a loan offer; confirm all figures with your lender.
Homeowners watching refinance conditions often want to understand how rates move over time. You can follow our plain-English rate updates to stay informed on mortgage-rate movement.
Disclaimer: The Housing Signal is an independent educational publisher. We are not a mortgage broker, lender, or licensed financial advisor, and nothing here is personalized financial advice. Calculator results are estimates based on the figures you enter and the assumptions published alongside each tool; they are not a quote, a pre-approval, or an offer of credit. Rates, programs, costs and market conditions change frequently, and national figures may not reflect your local market or your own circumstances. Figures cited are accurate as of the dates given and will change. Consult a licensed professional before making a decision.
Take your numbers to a lender or broker appointment. In the print dialog, choose “Save as PDF.”
How to Tell If a Refinance Is Worth It
A refinance is a trade: you pay closing costs today to buy a lower payment tomorrow. The only question that matters is how many months of savings it takes to earn those costs back, and whether you will still own the home when that month arrives. A lower rate that you sell out of after two years can still lose money — and a lower payment produced by resetting the clock to a fresh 30 years can cost more in total interest than the loan you replaced. The calculator above computes the break-even; here is the arithmetic.
How to calculate your refinance break-even (step by step)
- Find your current numbers. Your remaining balance, your current principal-and-interest payment, and how many years are left on the existing loan.
- Price the new loan. Apply the new rate and term to that remaining balance. The 30-year fixed average is 6.58% and the 15-year averages 5.96% (Freddie Mac PMMS, week ending July 23, 2026).
- Subtract to find monthly savings. Old principal and interest minus new principal and interest. Compare principal and interest only — taxes and insurance do not change with a refinance.
- Total the closing costs. Commonly 2–5% of the loan amount. If you roll them into the balance or accept a lender credit for a higher rate, they are still being paid — count them.
- Divide. Closing costs ÷ monthly savings = break-even in months. If you plan to move or refinance again before that month, the deal loses money.
A worked example you can verify by hand
Say you owe $320,000 at 7.25%, a payment of $2,183 in principal and interest. Refinancing that balance into a new 30-year at 6.58% gives a payment of $2,039 — a saving of $144 a month. At 2% of the loan, closing costs run about $6,400, so break-even arrives at $6,400 ÷ $144 ≈ 45 months, or just under four years. Two things that example does not show: if you were seven years into the old loan, the new 30-year term stretches your payoff to 37 total years and can raise lifetime interest even at the lower rate; and refinancing into a 20- or 15-year term instead would raise the monthly payment while cutting total interest sharply. Run both terms above before deciding.
How much lower does your rate need to be to refinance?
There is no universal threshold. The old 1% rule ignores loan size: on a $600,000 balance a 0.5% drop can pay back closing costs in under two years, while on a $150,000 balance even 1% may not. Compare your monthly savings against total closing costs and how long you will stay.
Does refinancing restart your 30-year mortgage?
Yes, if you refinance into a new 30-year term. Seven years into your current loan, a new 30-year resets the clock to 37 total years of payments — which can raise lifetime interest even at a lower rate. Refinancing into a 20- or 15-year term avoids the reset.
Does applying to several lenders for a refinance hurt your credit?
Barely, if you shop quickly. Mortgage inquiries made within a short rate-shopping window — 14 to 45 days depending on the scoring model — are treated as a single inquiry. A hard inquiry typically costs a few points and fades within a year. Shopping multiple lenders usually saves far more.
Rate-shopping window: FICO and VantageScore inquiry-deduplication rules, per Consumer Financial Protection Bureau guidance (as of July 2026). Closing-cost ranges are typical lender estimates and vary by state and loan size.
Before you run your numbers
For the decision framework behind these figures, read should you refinance your mortgage in 2026. Timing usually hinges on where rates go next — see our 2026 mortgage rates forecast and how Fed rate decisions affect mortgages. To model the new payment in full, including taxes and insurance, use our mortgage payment calculator.