Current Mortgage
Please enter your current loan balance.
Please enter your current rate.
Principal + Interest only from your mortgage statement
Please enter your current monthly payment.
New Loan
Please enter the new loan rate.
Typically 2-5% of loan balance. Average $5,000-$7,000
Monthly Savings
—
⚠️ Disclaimer: Results are estimates based on inputs provided. Actual rates, closing costs, and savings depend on your credit score, lender, and market conditions. Always obtain official Loan Estimates from at least 3 lenders before deciding.
Was this calculator helpful?
Sources & Methodology
Break-even formula verified against Bankrate, Rocket Mortgage, and Zillow refinance calculator approaches.
Bankrate — Mortgage Refinance Calculator
bankrate.com — Monthly savings, break-even, and lifetime interest savings methodology.
Rocket Mortgage — Refinance Break-Even Point
rocketmortgage.com — Break-even calculation: closing costs divided by monthly savings = months to break even.
Break-even: Closing costs ÷ Monthly savings. Monthly payment: M = P × [r(1+r)^n] / [(1+r)^n - 1]. Lifetime interest: Standard amortization on current remaining vs. new loan term.
Last reviewed: April 2026
How to Decide If Refinancing Your Mortgage Makes Sense
The only refinance calculation that truly matters is the break-even point: how many months will it take for your monthly savings to recoup the cost of refinancing? Every other metric is incomplete without this context.
Break-Even Formula
Break-Even Months = Total Closing Costs ÷ Monthly Payment Savings
Example: $320,000 at 7.5%, 25 years remaining, current P+I = $2,356/month
New loan at 6.5% for 30 years: new P+I = $2,023/month
Monthly savings = $333/month | Closing costs = $6,000
Break-even = $6,000 ÷ $333 = 18 months
New loan at 6.5% for 30 years: new P+I = $2,023/month
Monthly savings = $333/month | Closing costs = $6,000
Break-even = $6,000 ÷ $333 = 18 months
Rate Drop Needed to Break Even
| Loan Balance | Closing Costs | Stay 2 Years | Stay 5 Years | Stay 10+ Years |
|---|---|---|---|---|
| $200,000 | $4,000 | Save $167/mo needed | Save $67/mo | Any savings |
| $350,000 | $6,000 | Save $250/mo needed | Save $100/mo | Any savings |
| $500,000 | $10,000 | Save $417/mo needed | Save $167/mo | Any savings |
💡 Pro Tip: Shop at least 3 lenders simultaneously and request official Loan Estimates for direct comparison. Closing costs can vary by $2,000-$5,000 between lenders on the same loan. Lock your rate as soon as you find an offer you want — 30-to-45-day rate locks are standard.
Frequently Asked Questions
Break-even months = Total closing costs / Monthly payment savings. If closing costs are $6,000 and you save $240/month, break-even is 25 months. If you plan to stay longer than 25 months, refinancing is worthwhile.
Refinance closing costs typically run 2-5% of the loan amount. On a $350,000 loan that is $7,000-$17,500. Average closing costs are approximately $5,000-$7,000 per Freddie Mac data.
At $100/month savings with $5,000 in closing costs, break-even is 50 months. If you plan to stay at least 4+ years, yes. If you may sell in 2-3 years, no.
The real calculation is closing costs / monthly savings. A 0.5% rate drop on a $400,000 loan saves about $140/month, breaking even in 36 months on $5,000 of closing costs. The old 1% rule is too simplistic.
If you take a new 30-year loan, yes. If you have paid 8 years on a 30-year and refinance into another 30-year, you have extended your total period to 38 years. Solution: refinance into a term matching your remaining balance.
Most lenders require 620 or higher for a conventional refinance, with the best rates at 740 or above. FHA streamline refinances may accept 580. Credit score directly affects your rate.
Some lenders offer no-closing-cost refinances by rolling fees into the loan or charging a slightly higher rate (0.125-0.25% higher). Makes sense if you plan to sell or refinance within 3-5 years. Long-term holders save more paying costs out of pocket.
A cash-out refinance replaces your current mortgage with a larger loan, giving you the difference in cash. It accesses home equity for renovations or debt consolidation. Typically carries a slightly higher rate than a rate-and-term refinance.
Most refinances take 30-60 days from application to closing. Gather documents early: pay stubs, W-2s, bank statements, and current mortgage statement.
A 15-year mortgage typically carries a rate 0.5-0.75% lower than a 30-year. Switching from 30-year at 7% to 15-year at 6.25% on $350,000 raises payment by ~$700/month but saves over $180,000 in total interest.
Related Calculators
Popular Calculators
ATV Loan Calculator
Finance
Bitcoin DCA Calculator
Finance
3D Printing Cost Calculator
Finance
Car Lease Calculator
Finance
Stripe Fee Calculator
Finance
Pain & Suffering Calculator
Legal
TDEE Calculator
Health
Roofing Cost Calculator
Construction
GPA Calculator
Education
Mortgage Refinance Calculator
Finance
Cost Per Impression Calculator
Marketing
Markup Calculator
Finance