Refinance Calculator
Compare your current mortgage with a potential refinance and estimate payment changes, closing costs, break-even time and remaining interest.
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- Results shown instantly
Current Mortgage vs. Refinance
| Current Mortgage | Refinance Scenario | |
|---|---|---|
| Balance / Principal | $320,000 | $320,000 |
| Interest Rate | 6.5% | 5.5% |
| Remaining / New Term | 25 years | 25 years |
| Monthly P&I | $2,160.66 | $1,965.08 |
| Payoff Date | Jan 1995 | Jan 1995 |
| Remaining Interest | $328,199 | $269,524 |
| Total Remaining Payments | $648,199 | $589,524 |
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How Mortgage Refinancing Works
Refinancing replaces your existing mortgage with a new loan — typically with a different rate, term, or balance — and pays off the old loan.
When you refinance, a new lender pays off your current mortgage and issues a new loan. The new loan can have a different interest rate, a different term, and additional costs such as closing costs, points, or cash-out. The goal is usually to lower your monthly payment, reduce total interest, change your payoff timeline, or access equity.
A refinance decision depends on more than the new rate. The new term, the costs to refinance, and how long you plan to keep the loan all affect whether refinancing actually saves money.
What Is a Refinance Break-Even Point?
The break-even point is how long it takes for your monthly payment savings to recover the upfront costs of refinancing. If your upfront costs are $6,000 and refinancing lowers your payment by $200 per month, the break-even is about 30 months. If you sell or refinance again before break-even, the refinancing may not save money overall.
A break-even only exists when the new payment is actually lower. If the new payment is equal or higher, there is no payment-savings break-even — though refinancing could still make sense for other reasons, such as a shorter term or cash-out.
How Closing Costs Affect Refinancing
Closing costs and points are real expenses. You can pay them upfront in cash, or roll them into the new loan principal. Rolling costs in means you finance them over the new term — paying interest on the costs — but you keep more cash on hand now. The calculator keeps upfront and financed costs separate so they are never double-counted.
Interest Rate vs. Loan Term
A lower rate generally lowers your payment and total interest. But the new term matters just as much. Refinancing into a longer term can lower your monthly payment even at the same rate, because you spread the balance over more months — but it can increase total interest paid over the life of the loan.
Lower Payment vs. Lower Total Cost
A lower monthly payment is not the same as lower lifetime cost. A refinance that extends the term may reduce your payment while increasing total interest. The calculator shows both the monthly difference and the interest difference so you can see the full trade-off.
When Refinancing May or May Not Reduce Costs
Refinancing may help when a lower rate or shorter term reduces total cost and you keep the loan past break-even. It may not help when:
- The new term is much longer, increasing total interest despite a lower payment.
- Closing costs are high relative to the monthly savings, pushing break-even far out.
- You sell or refinance again before reaching the break-even point.
- The new rate is not actually lower than your current rate.
Refinance Calculator Methodology
How MoneyMetric HQ compares your current mortgage with a potential refinance.
Current mortgage. The remaining cost is calculated by amortizing your current balance at your current rate over your remaining term. The scheduled monthly P&I uses the standard amortizing formula. Remaining interest and total remaining payments are summed from the full-precision schedule.
New loan. The new principal equals your current balance plus any financed closing costs and points, plus any cash-out. The new monthly P&I and total interest are calculated independently from the new principal, new rate, and new term.
Closing costs. Costs are either paid upfront (cash, not added to the loan) or rolled into the loan principal (financed). They are never both. When financed, costs are amortized as part of the new principal and are not also counted as out-of-pocket cash.
Cash-out. A cash-out amount is added to the new principal. Cash-out proceeds are additional borrowing, not savings, and are never described as savings.
Payment difference. Monthly difference = current monthly P&I − new monthly P&I. A positive value is a payment reduction; a negative value is a payment increase. Wording stays neutral.
Break-even. A payment-savings break-even is calculated only when the new payment is strictly lower and there are upfront costs: break-even months = upfront costs ÷ monthly savings. When the new payment is equal or higher, or there are no upfront costs, no break-even is shown.
Interest difference. Current remaining interest − new total interest. A positive value means less interest; a negative value means the refinance increases total interest (common when the term is extended).
Rounding. MoneyMetric HQ performs calculations using full numerical precision internally and rounds values only for display. Lifetime totals are summed from the full-precision schedule, never from rounded payments.
See our full MoneyMetric HQ Methodology page for more.
Refinance Calculator FAQs
What does refinancing a mortgage mean?
Refinancing replaces your current mortgage with a new loan — usually with a different rate, term, or balance — that pays off the original loan. People refinance to lower their payment, reduce total interest, change the payoff timeline, or access equity.
How much could refinancing change my payment?
It depends on the new rate, the new term, and any costs rolled into the loan. The calculator shows the exact monthly difference between your current payment and the new payment for the scenario you enter.
What is a refinance break-even point?
Break-even is how long it takes for monthly payment savings to recover the upfront costs of refinancing. It only applies when the new payment is actually lower. If you sell or refinance before break-even, you may not save money overall.
How are closing costs handled?
Closing costs and points are either paid upfront in cash or rolled into the new loan principal. The calculator keeps these separate so they are never double-counted. Financed costs are amortized as part of the new loan.
Can closing costs be rolled into a refinance?
Yes. Rolling costs into the loan means you finance them over the new term, which adds interest to those costs but keeps more cash available now. The calculator models both upfront and financed options.
Does a lower rate always mean refinancing saves money?
No. A lower rate helps, but a longer new term can increase total interest even with a lower payment. The calculator shows both the monthly difference and the interest difference so you can see the full trade-off.
Can a lower payment increase total interest?
Yes. Extending the term spreads the balance over more months, lowering the payment but often increasing total interest paid over the life of the loan. The interest difference makes this visible.
How does a shorter refinance term affect payments?
A shorter term usually raises the monthly payment but reduces total interest, because the balance is paid off faster and accrues less interest. It also means you own the home free-and-clear sooner.
How does cash-out affect the calculation?
A cash-out amount is added to the new loan principal and increases the new monthly payment and total interest. Cash-out is additional borrowing, not savings, and is never described as savings.
Are these current mortgage rates?
No. The rates you enter are example or hypothetical rates for comparison. They are not current market quotes or offers from any lender.
Does this calculator mean I qualify for refinancing?
No. This is an educational tool. Actual qualification depends on lender requirements, your credit profile, income verification, the property, and other factors. Results are estimates, not approvals or offers.
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MoneyMetric HQ calculators are provided for educational and informational purposes. Results are estimates and may differ from lender, loan-servicer or other financial calculations because of loan terms, payment timing, rounding, fees, taxes, insurance and other factors. MoneyMetric HQ does not provide personalized financial, investment, tax, legal or credit advice. Refinance estimates are not loan offers, approvals, pre-approvals, guaranteed savings, or guaranteed rates. See our Methodology, Financial Disclaimer, and Privacy Policy.