Audited —·Last updated 27 Jul 2026·6 citations·Tier 1·0 uses

Mortgage Refinance Calculator

Free mortgage refinance calculator. Estimate monthly savings, break-even months, lifetime interest saved, and net refi cost for any refinance.

Mortgage Refinance Calculator

The principal you still owe on your existing mortgage — not the original loan amount. Check your latest statement.
$
The annual note rate on your existing loan. Found on your monthly statement or original closing documents.
%
How many years are left on your existing mortgage. A 30-year loan opened 5 years ago has 25 years remaining.
years
The rate quoted by the lender on your refinance loan estimate. Freddie Mac's PMMS publishes the current 30-year average.
%
New loan term
Lender fees, title insurance, appraisal, recording fees. Typically 2–5% of the loan amount on a standard refi.
$
Extra cash withdrawn at closing on a cash-out refi. Leave at $0 for a standard rate-and-term refinance.
$
Monthly savings
$313.07
Current monthly payment minus new monthly payment. Negative means the refi costs more per month — typical for cash-out or shorter-term refis.
Current monthly payment
$1,413.56
New monthly payment
$1,100.48
Break-even point
16 months
Lifetime interest saved
$27,893.16
Net refinance cost
$-22,893.16

Background.

A mortgage refinance calculator answers the most expensive question a homeowner faces between closing day and paying the loan off: is it actually worth replacing the loan I have with a new one? Refinancing means originating a brand-new mortgage at today's rate and using the proceeds to pay off the existing one. The mechanics are seductive — when market rates fall a point or two below your locked-in rate, the new monthly payment can be hundreds of dollars lower, the headline reads like free money, and lenders are quick to advertise the savings.

But refinancing is never free. Closing costs typically run 2% to 5% of the new loan amount — origination fees, title insurance, an appraisal, recording fees, lender's title, points if you buy the rate down — and someone has to pay them, either out of pocket at closing or rolled into the new principal where they quietly accrue interest for the rest of the loan.

This calculator strips the marketing away from the math. Enter your current balance, current rate, and years remaining; then enter the rate, term, and closing costs your lender is quoting on the refi. It computes the monthly payment on both loans using the standard amortizing-mortgage formula, subtracts them to give you the monthly savings, divides the closing costs by those savings to give you the break-even point in months, and projects the total payments over the full remaining term of each scenario to show whether the refi actually saves money once everything is added up.

The break-even point is the number that decides the deal. If you plan to stay in the house and keep the new loan past the break-even, the refi is profitable from that point forward. If you might sell or refi again before then, every dollar of closing cost is a dollar you will never recover. The widely-repeated rule of thumb says refinance when you can drop your rate by at least 1 percentage point, but that rule predates today's higher closing costs and assumes you stay in the home long enough to amortize them. The Consumer Financial Protection Bureau's official guidance is more rigorous: compute the break-even period and compare it to how long you realistically plan to keep the loan.

There are three other traps this calculator surfaces. First, resetting the amortization clock. Refinancing a 25-year remaining balance into a fresh 30-year loan can lower the monthly payment even at the same interest rate, but you have just added five years of payments to your retirement plan and the early years of the new loan are again dominated by interest, not principal — a quiet tax on long-term wealth that doesn't show up in the monthly-payment comparison.

Second, cash-out refinances change the tax treatment of the loan. Under the Tax Cuts and Jobs Act (TCJA), mortgage interest is only deductible on the portion of the loan used to buy, build, or substantially improve the home; cash-out proceeds used to pay off credit cards, fund a college tuition, or buy a car are not deductible, and the rules require you to track basis carefully. The TCJA also capped total deductible acquisition debt at $750,000 for loans originated after December 15, 2017. Third, no-cost refinances are not actually free — the lender pays the closing costs in exchange for a higher rate, typically 0.25% to 0.50% above par. The trade is worth it only if you plan to keep the loan for a short period; over a 30-year term, the higher rate costs far more than the closing costs it replaces.

The calculator below runs all four scenarios so you can compare them directly: standard rate-and-term refi, cash-out refi, shorter-term refi, and no-cost refi (model the last by setting closing costs to $0 and raising the new rate by 0.375%). The explainer that follows the widget walks through how to read the break-even number, when refinancing is mathematically the wrong move, how cash-out refis compare to HELOCs and second mortgages, and what the IRS actually requires for the interest deduction in 2026.

What is mortgage refinance calculator?

A mortgage refinance is the replacement of an existing home loan with a new one, secured by the same property. The new loan pays off the existing balance, and the homeowner begins making payments on the new loan under whatever rate, term, and structure it carries. Refinances fall into two broad categories. A rate-and-term refinance changes the interest rate, the term length, or both, but does not increase the loan balance beyond the existing payoff plus closing costs — the goal is to lower the monthly payment, shorten the term, or switch from an adjustable rate to a fixed one. A cash-out refinance increases the loan balance by an additional amount that the borrower receives in cash at closing, tapping accumulated home equity for purposes ranging from home improvements to debt consolidation. Both types involve a new origination, a new appraisal, and a new closing — meaning closing costs are paid again, even though the property and borrower have not changed. This calculator models a fixed-rate refinance with a single new rate held for the full new term. It does not model streamline refinances (FHA, VA, USDA programs that waive the appraisal and reduce documentation) or adjustable-rate refinances, both of which involve scenario analysis beyond a single payment calculation.

How to use this calculator.

  1. Enter your current loan balance — the principal still owed, not the original loan amount. Check your most recent mortgage statement; it is the line labeled "unpaid principal balance."
  2. Enter your current interest rate (the note rate, not the APR) and how many years are left on the existing loan. A 30-year mortgage taken out 5 years ago has 25 years remaining.
  3. Enter the new rate quoted by your refi lender on their Loan Estimate, then choose the new term. Match the remaining term if you want a pure rate refi; extend it to lower the payment further; shorten it to accelerate payoff.
  4. Enter closing costs. Use the total from your Loan Estimate's "Costs at Closing" section. If the lender is rolling them into the loan, still enter them here — the calculator accounts for the inflated principal automatically.
  5. If this is a cash-out refinance, enter the cash amount you intend to withdraw at closing. For a standard rate-and-term refi, leave this at $0.
  6. Read the six outputs. Monthly savings is the headline — what you save (or pay extra) every month. Break-even months tells you how long to keep the loan to recoup closing costs. Lifetime interest saved and net refinance cost show whether the refi saves money across the entire remaining term, which often disagrees with the monthly-savings number when you extend the term.

The formula.

PMT = P × [ r(1+r)ⁿ ] ⁄ [ (1+r)ⁿ − 1 ]
PMT · monthly paymentP · loan principalr · monthly raten · total payments

The calculator uses the standard fully-amortizing mortgage payment formula on both the current and new loans: PMT = P × r × (1+r)^n / ((1+r)^n − 1), where P is principal, r is the monthly interest rate (annual rate / 100 / 12), and n is total payments (years × 12). The current monthly payment uses your current balance, current rate, and years remaining. The new monthly payment uses a new principal equal to currentBalance + closingCosts + cashOut, the new rate, and the new term in months — this models the common practice of rolling closing costs into the loan. Monthly savings is currentMonthlyPayment − newMonthlyPayment, which can be negative if the refi raises the payment (typical for shorter-term refis or large cash-outs). Break-even months is closingCosts ÷ monthlySavings, the number of months of savings needed to recoup the upfront fees. The calculator clamps this to 9,999 when monthly savings are zero or negative — the refi never breaks even on monthly savings alone, so it must be justified on other grounds (cash extraction, term reduction, switching from ARM to fixed). Lifetime interest saved is currentMonthlyPayment × currentRemainingMonths minus newMonthlyPayment × newTermMonths — total dollars handed to the lender under each scenario, with the difference revealing whether the refi actually reduces long-run cost or merely shifts pain into the future via a longer term. Net refinance cost adds closing costs to the new total and subtracts the current total: positive means the refi costs more overall (a common result when extending a 25-year remaining loan into a fresh 30-year), negative means it saves money even after fees. All arithmetic uses arbitrary-precision decimal math (Decimal.js) to avoid floating-point drift on long-term schedules — a 30-year amortization compounds 360 times, and IEEE 754 floats accumulate rounding errors that can shift the final balance by dollars.

A worked example.

Example

A homeowner has $200,000 left on a 7% mortgage with 25 years to run — the current payment is $1,413.55 per month. Their lender offers a no-cash-out refi at 5% for a fresh 30-year term, with $5,000 of closing costs rolled into the loan. The new principal becomes $205,000, the new monthly payment drops to $1,100.49, and the homeowner saves $313.06 every month. Break-even arrives at month 16 ($5,000 ÷ $313.06 ≈ 15.97 months), so as long as they keep the new loan past 16 months, the closing costs are recouped. The lifetime story is more complicated. Over the 25 years remaining on the old loan they would have paid $424,065 in total; over the 30 years of the new loan they will pay $396,176 — saving $27,889 in lifetime interest, or $22,889 net of closing costs. The refi is clearly profitable, but notice the cost: they have added 5 years of payments to their mortgage and the first decade of the new loan is again interest-heavy. Had they refinanced into a new 25-year term at 5% instead, the monthly payment would be roughly $1,198 (lower savings of $215/mo, longer break-even of about 23 months), but the lifetime interest saved would jump to around $65,000 — almost three times higher. The rate-and-term decision matters as much as the rate decision.

new Term Years30
new Rate Percent5
closing Costs5,000
current Balance200,000
current Remaining Years25
current Rate Percent7
cash Out0

Frequently asked questions.

What is the 1% rule for refinancing a mortgage?
The 1% rule is a popular rule of thumb that says you should refinance only if the new rate is at least 1 full percentage point below your current rate. It originated in an era when closing costs were a smaller share of the loan and most borrowers stayed in their homes for the full term. Today the rule is too simplistic in both directions. With $5,000–$10,000 closing costs on a $300,000 loan, even a 0.5% drop can break even within 30 months and save significantly if you plan to stay in the home. Conversely, a 1.5% drop is a bad deal if you plan to sell within a year. The Consumer Financial Protection Bureau recommends ignoring rule-of-thumb thresholds entirely and computing your specific break-even point instead, which is what this calculator does.
When is refinancing a mortgage a bad idea?
Refinancing is mathematically the wrong move in four common scenarios. First, when you will sell or move before the break-even point — every closing-cost dollar is unrecovered. Second, when you reset a heavily-amortized loan back to a fresh 30-year term: even with a lower rate, the lifetime interest saved is often negative because you have re-front-loaded years of interest-heavy payments. Third, when the refi is cash-out and you will spend the cash on consumption (vacation, car, credit-card payoff) rather than investing it at a return greater than the mortgage rate — you have converted unsecured or future debt into 30 years of secured debt against your home. Fourth, when prepayment penalties on the existing loan exceed the refi savings. The CFPB's refinancing guide walks through each of these pitfalls in detail.
Is a cash-out refinance or a HELOC better for tapping home equity?
Cash-out refinances replace your entire mortgage at a single fixed rate for the full new term, locking in today's rate for 15–30 years. They are best when you need a large lump sum (typically $50,000+), current rates are at or below your existing rate, and you want payment certainty. Home equity lines of credit (HELOCs) are revolving credit secured by the home, with variable rates that move with the prime rate. They are best for irregular needs like staged home improvements where you draw funds over months or years, and for smaller amounts where the closing costs of a refi outweigh the rate certainty. HELOC closing costs are typically $0–$500 versus $3,000–$10,000 for a cash-out refi. Under the Tax Cuts and Jobs Act, interest on both is deductible only when used to buy, build, or substantially improve the home that secures the loan — consumer purposes are not deductible on either.
What is a no-cost refinance and is it actually free?
No, a no-cost refinance is not free — the lender pays your closing costs in exchange for a higher interest rate, typically 0.25% to 0.50% above the par rate. This is called a lender credit and it shows up on the Loan Estimate as a negative number that offsets the closing costs. The math: on a $300,000 loan, $5,000 in closing costs in exchange for an extra 0.375% rate adds roughly $65 to the monthly payment, meaning the lender recovers their $5,000 in about 6 years and profits from the higher rate for the remaining 24. A no-cost refi makes sense only if you plan to sell, refi again, or pay off the loan within 4–6 years; over a full 30-year term it always costs more than paying the closing costs yourself. To model it in this calculator, set closing costs to $0 and raise the new rate by 0.375%.
What is the difference between a rate-and-term refinance and a cash-out refinance?
A rate-and-term refinance changes only the interest rate, the loan term, or both. The new loan amount equals the existing payoff plus closing costs (if rolled in), with no extra cash to the borrower. A cash-out refinance increases the new loan balance beyond the existing payoff, with the difference paid to the borrower at closing. Cash-out refis carry slightly higher rates (typically 0.125%–0.375% above rate-and-term), require more equity (most lenders cap loan-to-value at 80%), and have different tax treatment — under IRS Publication 936, the cash-out portion is only deductible if used to substantially improve the home, while the rate-and-term portion retains the original loan's deductibility. Underwriting is also stricter on cash-out, with higher credit-score and debt-to-income thresholds.
Should I buy down my rate with discount points on a refinance?
Each discount point typically costs 1% of the loan amount and lowers the rate by 0.125% to 0.25%. The break-even calculation is similar to the refi itself: divide the cost of the points by the monthly savings from the lower rate, and compare to how long you will keep the loan. On a $300,000 loan, one point costs $3,000 and might save $40–$60 per month, breaking even at 50–75 months. Points usually make sense only if you will keep the loan substantially past the break-even period and you have cash on hand that would not earn a better return elsewhere. On a refi specifically, points are interest paid in advance and must be amortized over the life of the loan for tax purposes (per IRS Pub 936) — unlike a purchase mortgage, where points are fully deductible in the year paid.
How are refinance closing costs calculated?
Refinance closing costs typically run 2% to 5% of the loan amount and break into three groups. Lender fees include origination charges (0.5%–1% of loan), processing, underwriting, and any discount points. Third-party fees include appraisal ($500–$800), credit report, title insurance ($1,000–$3,000 depending on state and loan size), title search, recording fees, and a flood certification. Prepaid items include per-diem interest from closing date to month-end, the first year of homeowners insurance if you escrow, and several months of property taxes to fund the escrow account. The Federal Reserve's annual closing cost surveys show median refi costs of $4,000–$6,000 on a $300,000 loan, with significant geographic variation — title insurance alone can cost twice as much in some states as others.
Does refinancing restart my mortgage amortization?
Yes, and this is one of the most underweighted costs of refinancing. A new mortgage begins on payment 1 of its amortization schedule, regardless of how far you had progressed on the original loan. Because amortization is back-loaded — early payments are mostly interest, late payments are mostly principal — refinancing a heavily-paid-down loan into a fresh 30-year term shifts you back into the interest-heavy phase. On a $300,000 loan at 6%, payment 1 is 84% interest; payment 240 (year 20) is 35% interest. Refinancing year 20 into a fresh 30-year drops you back to 84% interest on the new loan. The lifetime-interest-saved output on this calculator captures this effect — it is why a refi can lower the monthly payment and still increase the total cost of homeownership over the long run.
Is mortgage refinance interest tax-deductible?
Mortgage interest on a refinanced loan follows the same rules as the original loan under IRS Publication 936. For loans originated (or refinanced) after December 15, 2017, interest is deductible on up to $750,000 of home acquisition debt ($375,000 if married filing separately). On a rate-and-term refinance, the new loan is treated as continuing the original acquisition debt and retains the deduction. On a cash-out refinance, only the portion equal to the existing payoff retains the original deduction; the cash-out portion is deductible only if used to buy, build, or substantially improve the home that secures the loan. Discount points paid on a refi must be amortized over the life of the new loan, not deducted in the year paid. The deduction is only useful if you itemize — with the elevated standard deduction, most homeowners no longer itemize and see no tax benefit at all.
How long does a mortgage refinance take to close?
Most refinances close in 30 to 45 days from application to funding, though it can stretch to 60 days during high-volume periods when rates drop sharply and lenders are backed up. The major steps are application and documentation (1–3 days), loan estimate disclosure (3 business days mandated by TILA-RESPA), appraisal (1–2 weeks), underwriting and conditional approval (1–2 weeks), and closing disclosure plus the 3-business-day right of rescission required on owner-occupied refinances. Rate locks typically run 30, 45, or 60 days — make sure your lock period exceeds your expected closing timeline by at least a week, because re-locking after expiration usually costs additional points.

References& sources.

  1. [1]Consumer Financial Protection Bureau — Refinancing Your Mortgage
  2. [2]Freddie Mac — Primary Mortgage Market Survey (PMMS, weekly mortgage rate series)
  3. [3]Federal Reserve — Consumer Credit and Mortgage Statistics (G.19 / Mortgage Debt Outstanding)
  4. [4]IRS Publication 936 — Home Mortgage Interest Deduction (cash-out limits, TCJA rules, points amortization)
  5. [5]Brealey, Myers & Allen — Principles of Corporate Finance, 13th ed., Chapter 2 (Present Value of an Annuity; PMT formula derivation)
  6. [6]Consumer Financial Protection Bureau — Loan Estimate and Closing Disclosure under TILA-RESPA
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