Home Loan Refinance Calculator 

A 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, a table pricing rate drops of 0.5 to 2.0 points for your exact loan, a closing-cost handling choice, cash-out, an extra-payment simulator and a same-payoff-date comparison that strips out the term-restart effect.

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 $2,120.34 to $1,798.65, saving $321.69 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 $17,413.29 more paid overall, even though a 10-year stay still nets $32,602.32 of savings. The calculator above is pre-filled with this exact loan, including a 24% tax bracket. Keep the same payoff date instead and the new rate saves $50,230.02 versus staying put, which is the rate itself without the extra five years of payments.

How the refinance math works

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 payment equals balance times the monthly rate times (1 plus the monthly rate) to the power of the number of payments, divided by ((1 plus the monthly rate) to the power of the number of payments minus 1). At a 0% rate, payment equals balance divided by payments. Monthly savings equals current payment minus new payment. Break-even equals closing costs divided by monthly savings, in months. Total interest for each loan equals (payment times months) minus the loan amount. The lifetime position compares total paid on each side, with closing costs counted exactly once: added to the new loan when you roll them in, added to the new total when you pay at closing. If your statement shows a different payment than the tool computes, use your statement figure for planning and the tool figure for comparison. For a first-loan payment with no refinance comparison, the mortgage payment calculator prices a single loan on its own.

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 paid at closing, a 24% marginal tax bracket and a 10-year planned stay. Every figure below is the tool exact output.

Add a 24% marginal tax bracket and one extra line appears: “After-tax view (24% bracket): about $244.48/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. 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. Run the same loan into a 15-year term at 6% instead and the picture flips. The payment rises to $2,531.57, so the tool prints a negative saving of $411.23 and a break-even of Never, because on payment alone there is nothing to recover. The lifetime line tells the real story: $174,418.59 less paid overall. For term-shortening refinances, trust the lifetime line and treat the stay line as a cash-flow warning, not a verdict on the deal.

Roll or pay? The closing-cost choice that moves the answer by $5,791.91

Take a $300,000 balance at 7% with 27 years left, refinanced to 6% over 30 years with $5,000 closing costs. Pay the $5,000 at closing instead of rolling it in and the whole picture changes. Rolled into the new loan: no cash needed at closing, new loan $305,000.00, payment $1,828.63, saves $234.82 a month, lifetime saving $10,249.64, break-even not applicable because nothing is paid out of pocket to recover. Paid at closing: $5,000 cash at closing, new loan $300,000.00, payment $1,798.65, saves $264.79 a month, lifetime saving $16,041.55, break-even 18.9 months. Pay cash if you can and plan to stay past break-even: the CFPB home loan toolkit uses roughly two years as its rule-of-thumb break-even test, and 18.9 months clears it comfortably. Roll if cash is tight, but know the rolled-in fees cost $5,791.91 in lifetime savings here. If you want to research the fees themselves first, the cost to refinance mortgage calculator breaks down what normally sits inside that figure. Either way, the Federal Reserve refinancing worksheet uses the same break-even rule this calculator does: closing costs divided by monthly savings, and only when the costs are paid in cash.

What each half-point of rate drop is worth on this loan

On the pre-filled loan, each extra half-point of rate drop buys a bigger payment cut and a faster break-even. These are the tool own rate-drop rows, at the same $6,000 costs and 30-year term.

One honest edge in that table: the drops are measured from your current rate, so on a loan already at a low rate, a drop that would take the rate to zero or below is marked n/a rather than inventing a negative-rate loan. The 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?” For a break-even focused view with no other angles, the break-even mortgage calculator isolates that single test.

When a lower payment costs you more

This is the honest part most refinance calculators skip. A $320,000 balance at 7.5% with 20 years left refinanced to 6.5% on a new 30-year loan saves $555.28 a month and breaks even on $8,000 of closing costs in 14.4 months. The catch: restarting the clock at 30 years adds $109,446.79 in lifetime interest, and $117,446.79 in total paid once the $8,000 costs are included, so this refinance wins on cash flow, not total cost. Refinance the same loan to 20 years at 6.5% instead and the payment is $2,385.83, saving $192.06 a month, breaking even in 41.7 months, with $46,095.40 less lifetime interest and debt-free on the original schedule. The 30-year option buys breathing room; the 20-year option builds wealth. Run both terms in the calculator before you choose. Whenever the new term exceeds your remaining years, the calculator shows a term warning and tells you to judge the deal on lifetime savings, not the monthly drop.

Extra payments and the same-payoff-date comparison

Two outputs sharpen the decision beyond the headline. First, the optional extra monthly payment simulates attacking the new loan: in the $300,000, 27-year worked example, $200 extra a month on the rolled new loan pays it off in 280 months (23.3 years) instead of 360, and total interest drops from $353,306.48 to $261,701.02, saving $91,605.46 against the standard new loan. If extra payments become your strategy, the overpay mortgage calculator models them as the main event rather than a refinance side output, and the amortization schedule calculator lists every payment in full-table form. Second, the same-payoff-date line answers the question the term-restart section raises: what if you refinance at the new rate but keep your current payoff date? For the 27-year example, that is $1,903.16 a month and $51,933.79 saved versus staying put, more than five times the $10,249.64 headline lifetime figure that bakes in three extra years of payments. Monthly savings tell you about cash flow; the same-date comparison tells you about wealth. Cash-out refinancing gets the same honest treatment. Take $100,000 cash out on that example, rolled in, and the new loan becomes $405,000.00: the payment rises to $2,428.18, which is $364.73 above the current payment, and the lifetime cost increases by $205,588.55 versus staying put. The new-loan-amount line always shows the cash out inside it, so the comparison never hides the extra borrowing. One tax note from IRS Publication 936: when you refinance, the new loan keeps the old loan deductible status only up to the balance you owed, and interest on cash-out money beyond that is deductible only if you use it to buy, build or substantially improve the home.

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 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: a 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, because 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, because a lower payment built on a longer term can cost more overall. And when the rate moves the wrong way, the tool says so plainly: refinancing a 5% loan into 6% on the same $300,000, 27-year loan with $5,000 paid at closing costs $109.53 more a month with a lifetime cost increase of $105,240.66, and the break-even line reads never.

What competing calculators miss

Most refinance tools stop at the monthly saving and the naive break-even. Bankrate break-even calculator is thorough, but it asks for the original loan amount, appraised value and original term, then buries the answer behind a full amortization report, and it never asks how long you plan to stay, so it cannot deliver a verdict for your timeline. NerdWallet refinance calculator gives clean side-by-side totals, but it sits inside a lender marketplace, and its default upfront fees can dominate the answer. Calculator.net and the generic tools offer 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. 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, four rate drops priced in one run, the roll-versus-cash choice with closing counted exactly once either way, an extra-payment payoff simulator wired into the result, and the same-payoff-date comparison computed in-tool from your own numbers.

Frequently asked questions

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References

1. Consumer Financial Protection Bureau. Your Home Loan Toolkit: refinance break-even guidance and closing cost review.
2. Board of Governors of the Federal Reserve System. A Consumer Guide to Mortgage Refinancings: the break-even worksheet and the warning that lower payments for more years can mean higher total cost.
3. Consumer Financial Protection Bureau. Loan Estimate Explainer: comparing lender offers on a consistent basis.
4. Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction: acquisition debt limit and refinancing rules.
5. Freddie Mac. Primary Mortgage Market Survey: weekly 30-year and 15-year fixed rate averages.
6. U.S. Department of Housing and Urban Development. FHA Streamline Refinance: requirements and net tangible benefit.
7. U.S. Department of Veterans Affairs. Interest Rate Reduction Refinance Loan (IRRRL) for eligible veterans.