Refinance Calculator – Should You Refinance?
Calculate monthly savings, break-even point, and lifetime interest savings from refinancing your mortgage.
🏠 Finance📐 Break-even = Closing Costs / Monthly Savings
Current balance ($)
Current rate (%)
New rate (%)
Remaining term (years)
Closing costs ($)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Refinance Calculator – Should You Refinance? | Break-even = Closing Costs / Monthly Savings | months |
Step-by-Step Examples
Example 1
7% to 6%, $300K, $6K Closing
Rate drops 1%.
- Monthly savings: $196 | Break-even: 31 months
- After that: $2,352/year savings
✓ 31-month break-even
Example 2
7% to 6.5%
Rate drops 0.5%.
- Monthly savings: $100 | Break-even: 60 months
- 2yr plan: probably not worth it
✓ 5yr break-even
Example 3
Only 5yr Remaining
Short term left.
- Low savings, closing costs rarely worth it for short remainders
✓ Usually not worth it short-term
Real-World Applications
Homeowners
Decide if refinancing makes sense.
Planners
Model refi scenarios for clients.
Brokers
Show savings opportunity to customers.
Real Estate
Refi analysis for investment properties.
Common Mistakes to Avoid
⚠️
Resetting the loan clock
New 30yr refi restarts amortization. Lower monthly payment but potentially more total interest over full new term.
⚠️
Ignoring break-even
If you sell in 2 years and break-even is 4 years, you lose money on the refinance.
Frequently Asked Questions
When to refinance? ▾
Rate drops 1%+ AND you stay past break-even. Many 2020-2021 buyers locked in 2.5-3% — they should NOT refinance at current rates.
Refinancing cost? ▾
Typically 2-5% of loan balance. No-cost options roll fees into rate or balance.
Cash-out refinance? ▾
Borrow above current balance to access equity. Higher rate and more interest, but useful for renovations or consolidating high-rate debt.