Mortgage Refinance Calculator
Estimates the break-even timeline on a mortgage refinance — the number of months of payment savings needed to recoup your closing costs — by comparing your current and new amortized monthly payments. Use it when rates drop or your credit improves.
Last updated: May 2026
About this calculator
Refinancing replaces your existing mortgage with a new loan, ideally at a lower rate. The monthly payment for each loan is calculated with the standard amortization formula, where P is the loan balance, r is the monthly interest rate (annual rate ÷ 12), and n is the number of remaining monthly payments. Monthly savings equal the old payment minus the new payment. This calculator returns the break-even point — total closing costs divided by those monthly savings — in months: Break-Even = closingCosts / (oldPayment − newPayment). If you plan to stay in the home beyond the break-even, refinancing is financially beneficial; the longer you hold the loan afterward, the greater your total lifetime savings. (If the new rate is not lower than the current rate there are no monthly savings and the refinance never breaks even.)
How to use
Assume a $280,000 balance, current rate 7.5%, new rate 6%, 25 years remaining, and $4,500 in closing costs. The current amortized payment works out to about $2,069/month and the new payment to about $1,804/month, so monthly savings ≈ $265. Break-even = $4,500 / $265 ≈ 17.0 months. If you expect to keep the home past roughly 17 months, the refinance pays for itself; after that point the monthly savings are pure benefit.
Frequently asked questions
When does it make sense to refinance your mortgage?
Refinancing typically makes financial sense when you can lower your interest rate by at least 0.5–1 percentage point, you plan to stay in the home long enough to pass the break-even point, and the closing costs are not so high that they offset the savings. The break-even calculation in this calculator is the key diagnostic: if closing costs divide into monthly savings within 24 months and you expect to stay at least that long, refinancing is generally worthwhile. Other valid reasons to refinance include switching from an adjustable-rate to a fixed-rate mortgage for payment certainty, or shortening the loan term to pay off your home faster.
How do refinancing closing costs affect whether a refinance is worth it?
Closing costs for a refinance typically run 2–5% of the loan balance, covering appraisal fees, title search, origination fees, and other lender charges. These costs reset the break-even clock, meaning you need to hold the refinanced loan long enough for accumulated monthly savings to exceed what you paid upfront. On a $300,000 loan, 3% closing costs equals $9,000 — at $200/month in savings, that's a 45-month break-even. Some lenders offer 'no-closing-cost' refinances that roll fees into the loan balance or rate, which lowers the break-even time but increases total interest paid. Always compare the all-in cost over your expected remaining time in the home.
Does refinancing restart my mortgage amortization and how does that affect total interest paid?
Yes — when you refinance, your new loan starts a fresh amortization schedule, which means early payments are again heavily weighted toward interest rather than principal. If you have 20 years left on a 30-year mortgage and refinance into a new 30-year loan, you extend your payoff date by 10 years and will pay interest on a large balance for a longer period, potentially negating the monthly savings in total dollar terms. To avoid this, consider refinancing into a loan term that matches your remaining term, or making extra principal payments on the new loan. This calculator's break-even analysis focuses on monthly cash flow savings; always also model total lifetime interest to get the complete picture.