Mortgage Refinance Calculator

Refinancing a mortgage means replacing your current loan with a new one — ideally at a lower interest rate, better terms, or both. The decision to refinance is fundamentally a break-even calculation: how long does it take for the monthly savings to recoup the closing costs? If you'll stay in the home longer than that break-even period, refinancing makes financial sense.

Break-even calculation: Total Closing Costs ÷ Monthly Savings = Break-Even in Months. Example: $5,400 in closing costs, $180/month in savings → break-even in 30 months (2.5 years). If you plan to stay at least 3 years, refinance. Sell within 18 months and you lose money on the refinance.

When refinancing makes strong sense: rates have dropped 0.75–1%+ below your current rate, your credit score has improved significantly (qualifying you for better rates), you want to switch from an adjustable-rate mortgage (ARM) to a fixed rate for stability, you want to shorten the loan term (15 vs 30 years), or you want to tap home equity (cash-out refinance) at a lower rate than alternatives.

When to be cautious: if you've already paid 15+ years on a 30-year mortgage, refinancing to a new 30-year mortgage restarts the amortization clock and increases total interest paid despite the lower rate. In this case, a 15-year refinance often makes more sense than a new 30-year.

No-closing-cost refinances: some lenders offer refinancing with no out-of-pocket closing costs by either adding the costs to the loan balance or charging a slightly higher interest rate (usually 0.25–0.375% higher). These can be smart if you're not sure how long you'll stay — you break even immediately but pay slightly more each month. Do the math both ways for your specific situation.

Cash-out refinancing: withdrawing equity as cash by borrowing more than your current balance. Useful for home improvements (which increase property value), but dangerous for consumer spending (converting home equity to consumer debt).