Refinance Calculator
A lower rate is not the same as a good refinance. This calculator weighs the new payment, the closing costs you pay today, and the interest you will actually save — then tells you how many months it takes to break even.
Side-by-side comparison
| Current loan | Refinanced | Difference | |
|---|---|---|---|
| Interest rate | — | — | — |
| Monthly payment (P&I) | — | — | — |
| Months remaining | — | — | — |
| Total interest | — | — | — |
| Closing costs | — | — | — |
| All-in cost | — | — | — |
Balance after refinancing
- Keep current loan
- Refinance
The break-even rule
Divide the closing costs by the monthly savings. The result is the number of months you need to stay in the home for the refinance to pay for itself. If you plan to move before that date, the refinance loses money — regardless of how good the rate looks.
Two refinements matter. First, closing costs are not always paid in cash; if they are rolled into the new balance, you pay interest on them for the life of the loan, which pushes the true break-even out by a few more months. Second, a refinance that lowers the payment by stretching the term back to 30 years can leave you paying more total interest even though the monthly number falls. The comparison table above separates those two effects.
What closing costs actually include
On a typical rate-and-term refinance, expect 2%–3% of the loan amount. The big line items are the lender origination fee, an appraisal ($500–$800), title insurance and title search, recording fees, and prepaid interest to the end of the month. You can sometimes avoid a full appraisal with an automated valuation, and you can sometimes negotiate the origination fee — but title and recording costs are hard to escape.
Lender credits are the opposite trade: the lender pays some closing costs in exchange for a rate 0.25–0.5 points higher. That is a fair deal only if you plan to keep the loan for less than the break-even period of the higher rate, which is usually the opposite of the reason people refinance.
Cash-out refinancing is a different decision
Taking equity out changes the loan amount, not just the rate. This calculator assumes the new loan equals the current balance — a rate-and-term refinance. If you are extracting cash, add it to the balance and treat the withdrawn amount as a separate borrowing decision with its own cost, because you are now paying 30 years of interest on money you spent today.
Resetting the clock is the hidden cost. Refinancing $340,000 from 7.25% to 6.0% after three years cuts the payment by roughly $355 a month, but it also restarts a 30-year term. Run the lifetime interest line before you sign — and if the goal is to be debt-free sooner, a shorter new term is usually the better trade.
Refinance FAQ
What the numbers do and do not capture.
How much does a refinance usually cost?
Two to three percent of the loan amount for a rate-and-term refinance, or roughly $6,000–$10,000 on a $340,000 balance. VA IRRRL and some streamline programs cost less because they skip the appraisal and underwriting is simplified.
What is a good break-even period?
Under 24 months is strong. Between 24 and 36 months is acceptable if you are confident you will stay. Beyond 36 months, the refinance is a bet on staying put for a long time — and you should ask whether a shorter term or an extra payment would serve you better.
Does refinancing hurt my credit score?
A hard inquiry typically costs a few points, and the new account lowers your average account age. Mortgage inquiries within a 45-day window are treated as a single inquiry by scoring models, so shopping several lenders at once is not penalized the way separate credit applications would be.
Should I refinance to a 15-year loan?
If you can carry the higher payment, a 15-year refinance usually comes with a lower rate and dramatically less total interest. On $340,000 at 6.0%, moving from 30 to 15 years raises the payment by about $760 but saves well over $200,000 in interest. The risk is that the payment is no longer optional.
Can I refinance with less than 20% equity?
Yes, but you will pay mortgage insurance again on a conventional loan, or an FHA annual premium. If your equity is between 5% and 20%, the payment savings from a lower rate can be entirely consumed by PMI — model it in the mortgage calculator with the PMI field before committing.
Is this calculator accurate for a cash-out refinance?
Not directly. Enter the full new loan amount (existing balance plus cash taken out) as the balance and compare against your current payment, but remember the extra interest belongs to the cash-out portion, not to the rate change. The monthly difference will overstate the benefit of the refinance itself.
Related calculators
Check the alternatives before you pay for an appraisal.
This comparison excludes prepaid interest, escrow adjustments, lender credits and any second mortgage. Refinance quotes vary by lender, credit score, loan-to-value and property type; use a Loan Estimate to compare real offers.