Home Loan Refinance Calculator
A home loan refinance only pays off if the monthly savings recover the closing costs before you move, and if the new term does not quietly hand the savings back in extra interest. Enter your current balance, rate and years remaining, plus the refinance offer, and this calculator returns the new payment, the break-even point, the lifetime interest comparison, a verdict for your planned stay, an after-tax break-even view and a table pricing rate drops of 0.5 to 2.0 points for your exact loan.
| Current loan | Refinanced loan | |
|---|---|---|
| Monthly payment (P&I) | ||
| Total interest | ||
| Total paid (P&I) |
Rate-drop comparison (same costs and term)
Payments are principal and interest only; taxes, insurance, and PMI are unchanged by refinancing and excluded from both sides. Assumes the new loan amount equals your current balance.
Quick Answer
Refinancing a $300,000 balance from 7% with 25 years left into a new 30-year loan at 6% cuts the payment from $2,120 to $1,799, saving $322 a month and breaking even on $6,000 of closing costs in 18.7 months. The catch sits in the lifetime line: the reset term means $17,413 more paid overall, even though a 10-year stay still nets $32,602 of savings. The calculator above is pre-filled with this exact loan.
Key takeaways
- Break-even is closing costs divided by monthly savings. If you will move or refinance again before that month, the deal loses money no matter how good the rate looks.
- A lower payment is not the same as a cheaper loan. Resetting to a fresh 30-year term can raise total interest even while the payment falls.
- Judge the deal on three lines together: break-even against your planned stay, the lifetime interest total, and the savings over your actual stay.
- The rate-drop table answers the better question: not “should I take 6%?” but “how big a drop do I need for this to pay off in my timeline?”
- Quick Answer
- What this calculator decides, and what it does not
- How to use the home loan refinance calculator
- The math: payments, break-even, lifetime and stay
- Worked example: $300,000 at 7%, refinanced to 6%
- What each half-point of rate drop is worth on this loan
- The amortization-reset trap, and the shorter-term answer
- When refinancing makes sense, and when it does not
- What competing calculators miss
- Frequently asked questions
What this calculator decides, and what it does not
This tool decides one question: whether swapping the home loan you already have for a specific refinance offer saves you money. It is not a rate-shopping page, not a prequalification check and not a first-loan repayment schedule.
Four neighbouring questions live on other pages of this site, and mixing them up produces bad decisions. A repayment schedule for a loan you are about to take is a different job from repricing a loan mid-stream, because only this tool asks how many years are left on the old loan. Prequalifying asks whether a lender will approve you at all and for how much; this tool assumes you have an offer in hand and tests its price. Current refinance rate listings tell you what the market charges today; this tool tells you whether the quote you were given beats the loan you hold. Qualification pages estimate the income and credit a lender wants; nothing here approves or declines you. Use this page when the offer exists and the question is purely “does it pay?”
How to use the home loan refinance calculator
Fill in your current loan first, then the offer, then your timeline. Results stay hidden until you click Calculate.
- Current loan balance: the amount you still owe, from your latest statement. The new loan is priced on the same amount, so this is a rate-and-term comparison with no cash-out and no costs rolled into the balance.
- Current rate and years left: use the years remaining, not the original term. This is the input most refinance tools skip, and skipping it is what hides the term-reset trap.
- New rate and new term: pick 30, 20, 15 or 10 years. Shorter terms usually raise the payment; the tool handles that honestly and reports a negative saving rather than hiding it.
- Closing costs: take the total from the lender’s Loan Estimate. The cost to refinance mortgage calculator breaks down what normally sits inside that figure if you do not have an estimate yet. Enter 0 for a no-closing-cost offer.
- Marginal tax bracket (optional): enter a bracket from 1 to 99, for example 24, and the results add an after-tax break-even line under the verdict. Leave it blank, or enter 0, and no tax line appears.
- Years you plan to stay: be honest. The verdict turns on whether break-even lands inside this horizon, not on whether the rate drop looks impressive.
The math: payments, break-even, lifetime and stay
Both loans are priced with the standard amortization formula, each on its own term. That single choice, pricing the current loan on its years remaining rather than on the new term, is what makes the comparison honest.
Monthly savings = Current payment − New payment
Break-even = Closing costs ÷ Monthly savings, in months
Total interest = (Payment × months) − Balance, computed for each loan
Lifetime position = Total paid on current loan − (Total paid on new loan + Closing costs)
Stay savings = (Monthly savings × months in your planned stay) − Closing costs
Every figure is rounded to the nearest dollar, with no cents shown. The same payment formula drives a plain mortgage payment calculator; the difference here is that two loans are priced side by side and judged against your stay.
Two of the tool’s methods are simplifications, stated plainly so you can judge them. The after-tax line multiplies the whole monthly payment saving by (1 minus your bracket). Only the interest part of a mortgage payment is potentially deductible, and the interest share shrinks over time, so the line overstates the tax drag somewhat; treat it as the direction and rough size of the effect, not a tax computation. The stay line is a cash-flow view: it totals the payment difference over your stay and subtracts closing costs. It does not model the different loan balances you would owe if you sold at the end of the stay, which is why it can show a loss for a shorter-term refinance that is building equity much faster. The lifetime line covers that side of the picture.
The verdict follows fixed rules. If the break-even month falls inside your planned stay and the lifetime position is also positive, the verdict is “Worth it”. If break-even lands inside your stay but the lifetime position is negative, the verdict is “Mixed” and suggests a shorter term. If the new payment is not lower, or break-even falls beyond your stay, the verdict is “Not worth it”, with the reason spelled out.
Worked example: $300,000 at 7%, refinanced to 6%
The pre-filled run is a $300,000 balance at 7% with 25 years left, refinanced to 6% on a new 30-year term, with $6,000 of closing costs and a 10-year planned stay. Every figure below is the tool’s exact output.
| Result | Tool output |
|---|---|
| Current payment (25 years left) | $2,120 |
| New payment (30 years at 6%) | $1,799 |
| Monthly savings | $322 |
| Break-even on $6,000 costs | 18.7 months (1.6 years) |
| Total interest: current vs new | $336,101 vs $347,515 |
| Lifetime position | $17,413 MORE overall with the refinance |
| Over the 10-year planned stay | Net savings of $32,602 after closing costs |
| Verdict | Mixed: break-even inside the stay, but more interest over the full life of the loan |
Add a 24% marginal tax bracket and one extra line appears: “After-tax view (24% bracket): about $244/month in real savings, so the true break-even stretches to 24.5 months.” The standard break-even does not move; the tax view sits beside it so you can see how much of the headline saving the deduction on your old, larger interest bills was quietly funding.
What each half-point of rate drop is worth on this loan
On the worked-example loan, each extra half-point of rate drop buys a bigger payment cut and a faster break-even. These are the tool’s own rate-drop rows, at the same $6,000 costs and 30-year term.
| Rate drop | New rate | Monthly savings | Break-even |
|---|---|---|---|
| -0.5 pts | 6.50% | $224 | 26.8 mo |
| -1.0 pts | 6.00% | $322 | 18.7 mo |
| -1.5 pts | 5.50% | $417 | 14.4 mo |
| -2.0 pts | 5.00% | $510 | 11.8 mo |
One honest edge in that table: the drops are measured from your current rate, so on a loan already at 1.5%, the -1.5 and -2.0 rows would take the rate to zero or below, and the tool marks those rows “n/a” rather than inventing a negative-rate loan.
The amortization-reset trap, and the shorter-term answer
The worked example saves $322 a month and still costs $17,413 more over the full life of the loan. Both facts come from the same cause: five years into a 30-year loan, most of each payment is still interest, and a fresh 30-year term stretches the remaining balance over 60 extra payments.
Run the same loan into a 15-year term at 6% instead and the picture flips. The payment rises to $2,532, so the tool prints “Monthly savings: -$411” and a break-even of “Never”, because on payment alone there is nothing to recover. The lifetime line tells the real story: total interest falls to $155,683 against $336,101 on the current loan, a lifetime position of $174,419 less paid overall. One warning about that run: the stay line shows a net loss over 10 years, because it counts only the higher monthly outgoings and ignores the far smaller balance you would owe after a decade of bigger payments. For term-shortening refinances, trust the lifetime line and treat the stay line as a cash-flow warning, not a verdict on the deal. Whether a lender will approve the higher payment is a separate question, covered by the home loan approval calculator.
When refinancing makes sense, and when it does not
Refinancing makes sense when the break-even lands well inside your stay and the lifetime line agrees; it does not when a small rate drop meets high costs or a short horizon. The Federal Reserve’s consumer guide to mortgage refinancing frames the same test: compare the total cost of the new loan against how long you will keep it.
Usually worth it
- Rate drop of 0.75 to 1 point or more, with costs recovered inside your stay
- Shortening the term when you can afford the higher payment: lifetime interest falls hard
- Dropping PMI after your home value rises past 20% equity
- Moving from an adjustable rate to a fixed rate before the adjustment bites
Usually not worth it
- A small drop (under 0.5 points) with full closing costs and a move planned in 2 to 3 years
- Resetting to 30 years late in your loan, when most of your payment is already principal
- Repeating refinances every time rates dip slightly, paying closing costs again each time
- Judging by the payment alone: a lower payment built on a longer term can cost more overall
What competing calculators miss
Most refinance tools stop at the monthly saving and the naive break-even. The gaps below are the reason this page shows five outputs where rivals show two:
- Bankrate’s break-even calculator: thorough, but it asks for the original loan amount, appraised value and original term, then buries the answer behind a full amortization report. It never asks how long you plan to stay, so it cannot deliver a verdict for your timeline.
- NerdWallet’s refinance calculator: clean side-by-side totals, but it sits inside a lender marketplace, and its default upfront fees can dominate the answer; its own sample run shows a break-even of 2,695 months, a number no borrower can act on.
- Calculator.net and the generic tools: competent payment math, one scenario at a time. To compare a 0.5-point drop against a 1.5-point drop you re-run the whole form, and the lifetime cost of resetting the term gets a sentence at most.
- TrueValueCalc: strong on break-even and closing-cost education, but it repeats the old “1% rule” framing its own analysis shows is incomplete, and offers no after-tax view or planned-stay verdict.
- The gap this page fills: your actual years remaining, a verdict tied to your planned stay, the lifetime interest comparison that exposes the term reset, an after-tax break-even for borrowers who deduct interest, and four rate drops priced in one run.
Frequently asked questions
Divide total closing costs by monthly savings. With $6,000 in costs and $322 in monthly savings, break-even is 18.7 months. If you sell or refinance again before that month, you lose money on the deal.
Sometimes. A longer term at a lower rate cuts the payment but restarts amortization, which can raise total interest. Compare the lifetime totals, not just the payment, and weigh them against how long you will actually stay.
A rate reduction of roughly 0.75 to 1 percentage point, closing costs recovered well inside your planned stay, and no plan to move soon. Smaller drops can still work with very low closing costs.
A standard rate-and-term refinance starts a brand-new term, usually 30 or 15 years, regardless of how many years you had left. You can ask for a custom term (for example 25 or 20 years) to avoid extending your payoff date.
Yes, through lender credits or rolling costs into the balance. Lender credits usually mean a slightly higher rate, and rolling costs in means paying interest on them for decades. Enter 0 for closing costs to model the payment effect, then compare the rate you are offered.
They are excluded from both loans. Property tax and homeowners insurance do not change when you refinance (your escrow continues), so including them would add the same amount to both sides and distort the comparison.
Conventional refinances generally want 620 or higher, with the best rates reserved for scores around 740 and up. FHA and VA streamline refinances have more flexible requirements. Your score directly affects the new rate you are offered.
The naive break-even divides closing costs by monthly payment savings. The true break-even adjusts for taxes: because mortgage interest is deductible for many borrowers, this calculator estimates after-tax savings as payment savings times (1 minus your marginal tax rate), which stretches the break-even longer. It is a simplification, because only the interest part of a payment is deductible, but it shows the direction and rough size of the tax effect. This calculator shows both.
It depends on your balance, costs, and timeline, not on a fixed rule. The rate-drop comparison table prices 0.5 to 2.0 point drops for your loan so you can see which drop breaks even inside your planned stay.
Because the new payment is higher than the current one, which is normal when you shorten the term. On the worked-example loan, a 15-year refinance at 6% raises the payment to $2,532, so the tool prints a negative saving and a break-even of Never, while the lifetime line shows $174,419 less paid overall. Read the payment line and the lifetime line together.
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References
- Board of Governors of the Federal Reserve System. A Consumer’s Guide to Mortgage Refinancings. Accessed October 22, 2026.
- Board of Governors of the Federal Reserve System. Consumer Handbook on Adjustable-Rate Mortgages. Accessed October 22, 2026.
- Consumer Financial Protection Bureau. Loan Estimate Explainer. Accessed October 22, 2026.
- Consumer Financial Protection Bureau. Closing Disclosure Explainer. Accessed October 22, 2026.
- Consumer Financial Protection Bureau. Explore Loan Options. Accessed October 22, 2026.
- Consumer Financial Protection Bureau. Explore Interest Rates Tool. Accessed October 22, 2026.
- Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction. Accessed October 22, 2026.
- Freddie Mac. Primary Mortgage Market Survey. Accessed October 22, 2026.
- U.S. Department of Housing and Urban Development. FHA Streamline Refinance. Accessed October 22, 2026.
- U.S. Department of Veterans Affairs. Interest Rate Reduction Refinance Loan (IRRRL). Accessed October 22, 2026.