Mortgage Refinance Calculator (Break-Even & Lifetime Savings)
Compare your current mortgage against a refinance offer: old and new payment, the break-even month on closing costs, and the lifetime interest difference, including what a reset term really costs.
What you'd refinance, from your latest statement
The annual rate on your existing loan
Time left on the current loan
The rate you're being quoted
Matching your remaining years avoids the term reset
Typically 2-6% of the loan amount
New monthly payment
$1,634
$363 less than the $1,997 you pay now
Break-even on closing costs
1 year 5 months
for monthly savings to cover the $6,000 in costs
Lifetime interest difference
$28,673 less
closing costs included; the new loan runs until Aug 2056
Keeping the loan vs. refinancing it
| Metric | Current loan | New loan |
|---|---|---|
| Monthly payment (P&I) | $1,997 | $1,634 |
| Rate | 7.25% | 5.75% |
| Paid off around | Aug 2052 | Aug 2056 |
| Interest still to pay | $342,914 | $308,241 |
| Interest plus closing costs | $342,914 | $314,241 |
Principal and interest only, with closing costs paid at closing rather than rolled into the balance. If the new term is longer than your remaining years, part of any monthly saving comes from stretching the debt out, not from the cheaper rate.
Three numbers decide a refinance
Refinancing replaces your loan with a new one, and three outputs tell you whether the swap pays. The monthly saving: old payment minus new, both from the standard amortization formula. The break-even month: closing costs divided by the monthly saving, which is how long you must keep the new loan before the fees stop owning you. And the lifetime interest difference: all remaining interest on the old loan versus all interest on the new one plus the costs. The first two flatter almost any refinance; the third is where bad ones get caught.
A refinance that wins on every line
Take the defaults: $280,000 left at 7.25% with 26 years to go, a payment near $1,997. Refinance to 5.75% over 30 years with $6,000 in costs and the payment drops to about $1,634, saving $363 a month. Break-even arrives around month 17, and lifetime interest falls by roughly $29,000 even after paying the costs and adding four years of term. When the rate gap is that wide, the math is loud. The quiet cost is the four extra years: pay the old $1,997 anyway, as the mortgage payoff calculator models, and the new loan ends years earlier while keeping the option to drop back to $1,634 in a tight month.
The term-reset trap, in dollars
Now shrink the rate gap. The same borrower offered 6.75% over 30 years still sees the payment fall by about $180 a month, which feels like a win. But restarting a 26-year loan as a 30-year one puts you back at the interest-heavy start of the amortization curve, and the lifetime picture flips: about $37,000 more in total interest and costs than simply keeping the old loan. A lower payment and a worse deal, at a lower rate, at the same time. The escape hatches are matching the new term to your remaining years or prepaying the difference. And since lenders will quote a menu of rates for upfront cash, the mortgage points calculator handles whether buying the refinance rate down is worth it.
Frequently asked questions
When is refinancing worth it?
When you'll keep the new loan well past the break-even month, and the lifetime interest picture improves too. A common rough test is a rate drop of half to one percentage point with a break-even under two or three years, but the honest answer comes from your own numbers: monthly savings, closing costs, and how long you'll stay.
What closing costs come with a refinance?
Typically 2-6% of the loan amount, covering lender fees, appraisal, title work, and recording. On a $280,000 balance that's roughly $5,600 to $16,800. Every dollar of it has to be earned back by monthly savings before the refinance turns profitable, which is exactly what the break-even number measures.
Should I roll closing costs into the new loan?
Rolling them in means you borrow the costs too, so they accrue interest for the life of the loan and slightly raise the payment, which pushes break-even further out. It preserves cash today in exchange for a worse lifetime picture. This calculator assumes costs are paid at closing; if you'd roll them in, add them mentally to the balance to approximate the effect.
Does refinancing restart my amortization?
Yes, and it's the trap to watch. A new 30-year loan starts at the interest-heavy end of the amortization curve, even if you were 10 years into your old one. A lower payment from a longer term can still mean more total interest. Matching the new term to your remaining years, or keeping the old payment amount as prepayment, avoids the reset.
Can I refinance into a shorter term?
Yes. Moving from a 30-year to a 15- or 20-year loan usually raises the payment but cuts the rate and slashes lifetime interest. It's the version of refinancing where both the monthly and lifetime numbers can win, provided the higher payment fits your budget comfortably.
Does this calculator save my numbers?
No. Everything runs in your browser and nothing you type is stored or sent anywhere.
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