Mortgage Refinance Calculator: Break-Even, Savings & New Payment

A mortgage refinance is judged by two numbers: how much the monthly payment falls, and how long it takes those savings to pay back the closing costs. Everything on this page flows from the standard amortizing-loan formula.

• Monthly payment: M = P × r ÷ (1 − (1 + r)^−n), where r = annual rate ÷ 12 and n = number of monthly payments
• Monthly savings: current payment − new payment
• Upfront cost: closing fees + (points% × new loan amount); 1 point = 1% of the loan
• Break-even point: upfront cost ÷ monthly savings, in months
• Lifetime savings: (current payment × months left) − (new payment × new months + upfront cost)
• Cash-out: new loan amount = remaining balance + cash-out amount

The calculator compares what is left on your current loan — not what you originally borrowed — against the full cost of the new loan plus its upfront fees. That is the only comparison that tells you whether refinancing leaves you richer.

Sources: the standard amortizing-loan payment formula; break-even computed as upfront cost divided by monthly savings; methodology mirrors calculator.net's refinance calculator.

Take a $300,000 mortgage at 7% with 30 years left, and a refinance offer of 6% for 30 years with $6,000 in costs and fees, no points and no cash-out.

1. Current payment: 300,000 × 0.005833 ÷ (1 − 1.005833^−360) = $1,995.91 per month.
2. Upfront cost: $6,000 in fees + 0% points = $6,000.00.
3. New payment: 300,000 × 0.005 ÷ (1 − 1.005^−360) = $1,798.65 per month.
4. Monthly savings: $1,995.91 − $1,798.65 = $197.26.
5. Break-even: $6,000.00 ÷ $197.26 ≈ 30.4 months (about 2.5 years).
6. Lifetime: staying put means $718,526.69 of remaining payments; refinancing means $647,514.57 + $6,000.00 = $653,514.57. You save $65,012.13 — refinancing would be financially LESS expensive.

If you plan to keep the home longer than 30.4 months, the refinance pays for itself and then keeps paying you $197.26 a month.

The calculator compares your remaining obligation against a new loan offer and gives a verdict. You only need the details from your current statement and the quote from your lender.

Step by step

1. Enter your current loan. The remaining balance, the interest rate and how many years are left. The calculator works out your current monthly payment from these.
2. Enter the new loan offer. The new term, the new rate, plus any points, closing costs and the cash-out amount if you want cash from your equity.
3. Press Calculate. Read the new monthly payment, monthly savings, upfront cost, break-even point and the overall verdict.
4. Check the comparison table. It lines up the current and new loans row by row — principal, payment, length, rate, total payments, total interest, upfront cost and time to break even — so nothing hides in the fine print.

Points are optional: leave them blank for a no-points quote. Cash-out raises the new loan balance, so a cash-out refinance can still show higher monthly costs even at a lower rate.

Refinancing means replacing your current mortgage with a new loan, usually at a lower interest rate or with different terms. The new lender pays off your old balance, and from then on you make payments on the new loan. Homeowners most often refinance to lower their rate, shorten or lengthen the term, move from an adjustable to a fixed rate, or tap home equity as cash.

There are a few common flavors. A rate-and-term refinance keeps the loan amount the same and just changes the rate or term. A cash-out refinance replaces the mortgage with a larger one and hands you the difference in cash — the new principal is the old balance plus the cash-out amount. A cash-in refinance goes the other way: you bring money to closing to shrink the balance.

Why homeowners refinance

Rates move, incomes change and equity grows. When market rates fall below what you signed years ago, refinancing can cut hundreds off the monthly payment — the first step is to estimate your current payment with a mortgage calculator so you know exactly what you are comparing against. Shortening the term is the other classic move: a 30-year loan refinanced into a 15-year loan usually raises the payment but slashes total interest.

A lower rate alone does not make a refinance a good deal — the closing costs have to be paid back by the savings. The table below shows the situations where refinancing usually wins, and what to watch for in each.

The golden rule is the break-even test: if you expect to keep the home longer than the break-even point, refinancing almost always pays. Also compare the APR rather than the headline rate — an APR calculator folds points and fees into the true yearly cost, so a "low rate" with heavy points cannot hide behind a cheap quote.

The break-even point is the month when your cumulative savings finally cover what the refinance cost you upfront. Before that month you are still paying off the privilege of refinancing; after it, every payment is cheaper than the old one would have been.

Here is the full side-by-side comparison for the worked example above ($300,000 at 7% with 30 years left, refinanced to 6% for 30 years with $6,000 in costs):

Points and fees

Points are prepaid interest: paying 1 point (1% of the loan) buys the rate down, typically by about a quarter of a point. Points only pay off if you keep the loan long enough to recover them — the same break-even logic applies. Closing costs on a refinance typically run 2% to 5% of the loan amount. For an independent walkthrough of the trade-offs, the Consumer Financial Protection Bureau's "Should I refinance?" guide is a solid starting point.