Mortgage Refinance Calculator
Compare your current mortgage to a refinance, including closing costs and the break-even point.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Current balance
- $250,000
- Current rate
- 7.25%
- Years left on current loan
- 27
- New rate
- 6%
- New term (years)
- 30
- Closing costs
- $4,500
break-even on closing costs in 17 months
- Current payment$1,760.48
- New payment$1,498.88
- Break-even17 mo
How the monthly payment savings changes with current balance
Holding the other inputs at the example above, here is how the result moves as current balance changes.
| Current balance | Monthly payment savings | Current payment |
|---|---|---|
| $125,000 | $130.80 | $880.24 |
| $200,000 | $209.29 | $1,408.39 |
| $250,000 | $261.61 | $1,760.48 |
| $375,000 | $392.41 | $2,640.73 |
| $500,000 | $523.22 | $3,520.97 |
The math behind it
The calculator amortizes your current balance at your existing rate over the years left, and again at the new rate over the new term, to get both monthly payments. The difference is your monthly saving. Dividing your closing costs by that saving gives the break-even — the number of months until the refinance pays for itself. It also compares lifetime interest on each loan, because a longer new term can raise total interest even when the monthly payment drops.
Assumptions & limits
- Both payments are principal and interest on the same balance; taxes, insurance, and PMI are not modeled.
- The break-even is closing costs divided by the monthly payment saving, ignoring the time value of money.
- A new, longer term lowers the payment but resets the clock — lifetime interest can rise even at a lower rate, which the results flag.
- It assumes closing costs are paid separately, not rolled into the loan; financing them would change the numbers.
- A single fixed interest rate is assumed for each loan.
Source: Freddie Mac PMMS via FRED. Annual averages; latest weekly reading shown.
Common questions
What is the break-even point on a refinance?
It is how many months of lower payments it takes to recover your closing costs. The calculator divides the costs by the monthly saving. If you expect to keep the home past that month, the refinance pays off; if you might move sooner, it may not.
Can a lower rate still cost me more?
Yes. Refinancing a loan with 27 years left into a fresh 30-year term lowers the payment but stretches repayment over more years, which can raise total interest despite the lower rate. The calculator's lifetime-interest comparison shows when this happens.
Should I roll closing costs into the loan?
Financing the costs avoids cash out of pocket but increases the balance and the interest you pay on it. This calculator assumes you pay them separately. If you plan to finance them, treat the break-even as slightly optimistic and factor in the added interest.