Refinancing replaces an existing mortgage with a new loan that pays off the current balance. The new mortgage may carry a different interest rate, a different loan term, a different balance, or a different loan type. Refinancing typically involves a new application, underwriting, title work, appraisal, and formal closing with real closing costs. It is not a free adjustment to your existing loan. This calculator compares the projected cost of your current loan against a proposed refinance so you can evaluate whether the change is financially worthwhile under your specific assumptions.
Mortgage Refinance Calculator
Compare your current mortgage with a proposed refinance to estimate monthly savings, break-even time, and lifetime cost.
Reviewed by the Smart Finance Calculators Editorial Team · Last reviewed:
Educational planning estimate only. Not a loan offer, prequalification, or refinancing recommendation. Actual rates, costs, and eligibility depend on your lender and complete financial profile.
Example scenarios (editable)
Current mortgage
$
%
For example, 6 if 15 years and 6 months remain.
$
Enter 0 if none.
Current monthly payment
Property taxes, insurance, and other costs
$
$
$
$
$
Proposed refinance
%
Enter the rate you have been offered or are estimating.
$
Closing costs
$
Amount in dollars, not point count.
$
$
$
$
$
$
$
Interest paid at closing for partial first month.
$
$
$
Reduce upfront cost in exchange for a higher rate.
$
$
Displayed separately — not counted as transaction cost.
Proposed monthly housing costs (defaults to current values)
$
$
$
$
$
Expected time remaining in this home
Used to estimate whether break-even is reached before your expected move date. Not a recommendation to refinance or move.
Enter your proposed interest rate above to see refinance results.
About this calculator
Refinancing replaces an existing mortgage with a new loan that pays off the current balance. The new mortgage may carry a different interest rate, term, balance, or type. Refinancing typically involves a new application, underwriting, appraisal, title work, and a formal closing with real closing costs — it is not a free adjustment to your existing loan.
A refinance may lower the rate, lower the monthly payment, shorten repayment, change loan type, remove mortgage insurance, or provide access to equity. Each objective involves trade-offs. A lower payment may result from extending the loan term rather than from a lower rate. Cash-out proceeds are borrowed funds that must be repaid with interest. Closing costs can reduce or eliminate projected savings, particularly when you plan to move soon.
This calculator estimates the monthly payment change, closing costs, simple and cumulative break-even points, remaining and proposed interest, payoff-date shift, and outcome through your expected time in the home. It does not determine whether you qualify for a refinance, what rate a lender will offer, or guarantee any savings. Results depend entirely on the numbers you enter.
What is mortgage refinancing?
Refinancing pays off an existing mortgage by replacing it with a new mortgage. The new loan starts a fresh amortization schedule, so early payments again go primarily to interest. Homeowners refinance for several common reasons:
- Lower the interest rate — reducing the rate lowers the interest portion of each payment
- Lower the monthly payment — may come from a rate reduction, a longer term, or both
- Shorten the repayment period — a shorter term means higher payments but less total interest
- Change the loan type — for example, from adjustable to fixed rate for payment predictability
- Remove mortgage insurance — if the new LTV falls below the threshold, PMI may be eliminated
- Access home equity — a cash-out refinance converts equity into loan proceeds; the cash is a debt, not a windfall
Refinancing usually requires a new loan application, income and employment verification, a credit pull, an appraisal, and a title search. Closing costs are incurred regardless of whether you use the existing lender or a new one.
A lower payment does not always mean a lower cost
A monthly payment can be reduced by lowering the rate, reducing the balance, extending the term, removing mortgage insurance, or changing taxes and insurance. The first two generally reduce total cost. Extending the term can produce a lower payment without reducing — and sometimes while increasing — the total amount paid over the life of the loan.
Extending from 25 remaining years to a new 30-year term adds 60 months of interest accrual. Even at a meaningfully lower rate, 60 extra months can exceed the interest savings from the rate reduction. Always compare the monthly P&I payment, net closing costs, remaining interest on the current loan, total interest on the proposed loan, payoff dates, and estimated savings through your expected move date.
What is the refinance break-even point?
Simple break-even divides net closing costs by the monthly P&I savings:
Break-even months = Net refinance costs ÷ Monthly P&I savings
For example: $7,500 in net costs ÷ $350 monthly savings = about 21 months. If you plan to stay more than 21 months, the refinance may recover its cost; if you plan to move sooner, you would pay closing costs without fully recovering them.
Simple break-even does not fully account for financed closing costs, term extensions, different payoff dates, cash-out borrowing, changes in taxes or insurance, or another planned refinance. This calculator also tracks a cumulative break-even — a month-by-month comparison of total cost on each path. The cumulative break-even is the first month where the refinance path has cost less in total than staying in the current loan.
What closing costs should be included?
For the most accurate break-even, include all lender and third-party charges: origination charges, discount points, appraisal fee, credit report fee, title and settlement fees, recording and government fees, attorney fees where required, and prepaid interest for the partial first month. Escrow funding represents money set aside into your escrow account, not a transaction cost, and this calculator tracks it separately. Compare the itemized Loan Estimate from each lender for the most accurate figures rather than using any universal percentage estimate.
Paying closing costs upfront versus financing them
Paying upfront requires more cash at closing but keeps the new balance equal to the current payoff. Financing costs adds them to the balance, raises the monthly payment slightly, and accrues interest on those costs for the life of the loan. Lender credits reduce the cash required at closing by accepting a higher interest rate — credits increase the monthly payment and total interest. The right choice depends on available cash, how long you plan to stay, and the net cost of each option. This calculator models all three methods.
Resetting the loan term
Choosing a new 30-year term when you have 25 years remaining extends your payoff date by five years. Even at a lower rate, paying interest for 360 months instead of 300 can mean more total interest paid over the full term of the new loan. This calculator always displays the current remaining term, the proposed new term, and the difference so the extension is clearly visible and not hidden in the payment comparison.
A shorter new term — such as 15 years — raises the monthly payment but typically reduces total interest substantially and provides an earlier debt-free date. This calculator lets you test any term to find the combination of rate and term that works for your situation.
Cash-out and cash-in refinancing
Cash-out refinancing replaces the current mortgage with a larger loan and pays the difference in cash at closing. This increases the mortgage balance, reduces home equity, and typically raises total interest paid. The cash received is borrowed money — not a saving or a gain — and must be repaid with interest. A higher balance also raises the LTV ratio, which may require mortgage insurance or affect the available rate.
Cash-in refinancing involves bringing extra cash to closing to pay down the principal balance, resulting in a new loan smaller than the current payoff. This can lower the monthly payment, reduce total interest, and may eliminate PMI if the new LTV falls below the relevant threshold. The cash-in amount and closing costs are tracked separately in this calculator so you see the total cash-to-close requirement.
Discount points and lender credits
Discount points are prepaid interest paid at closing in exchange for a lower ongoing rate. One point equals 1% of the loan amount. Points increase upfront cost to reduce the monthly payment and long-run interest. They are worth paying only if you keep the loan long enough for cumulative savings to exceed the cost. Lender credits work in the opposite direction — the lender offsets part of your closing costs in exchange for a higher rate, which increases the monthly payment and total interest. Credits are most advantageous when you have limited cash and plan to move before the higher rate cost exceeds the credit received.
When refinancing may not break even
A refinance may not be financially beneficial in several common situations: planning to move soon (closing costs may not be recovered before the sale), high closing costs relative to payment savings, a small payment reduction that stretches the break-even period, a longer new term that increases lifetime interest, another planned refinance that would restart the break-even clock, cash-out borrowing that increases the balance and offsets rate savings, or a current loan already near payoff where resetting adds many months of interest.
This calculator identifies the break-even period and whether it falls before or after your expected move date so you can evaluate these trade-offs with your actual numbers.
Worked example
The following example uses the calculator defaults with a proposed rate of 5.50%. Enter those values above to reproduce these results interactively.
Current mortgage
- Balance
- $250,000
- Interest rate
- 7.00%
- Remaining term
- 25 years (300 months)
Proposed refinance
- New rate
- 5.50%
- New term
- 30 years (360 months)
- Net closing costs
- $7,500 upfront
- Expected time in home
- 7 years
Calculation results
| Current monthly P&I | $1,767 |
| Proposed monthly P&I | $1,419 |
| Monthly P&I savings | ~$348/month |
| Net closing costs | $7,500 |
| Simple break-even | ~22 months |
| Remaining interest (current loan) | ~$280,046 |
| Total interest (proposed loan) | ~$261,090 |
| Current payoff date | ~25 years from today |
| Proposed payoff date | ~30 years from today |
| Months added to repayment | 60 months (5 yrs) |
| P&I savings through 7-year horizon (net of closing costs) | ~$21,732 |
| Lifetime interest difference | ~$18,956 (refinance saves) |
Figures are estimates from standard fixed-rate amortization. The proposed rate in this example is 5.50%. Enter that value in the calculator above to see live results. Actual results for your loan will differ.
Frequently asked questions
The change in monthly payment depends on the rate difference, new loan term, new loan balance, and removal or addition of mortgage insurance. Reducing the rate by one percentage point on a $250,000 balance with 25 years remaining lowers the principal-and-interest payment by roughly $160 to $180 per month depending on the term. Extending to a 30-year term may lower the payment further but increases total interest paid. Enter your specific rate, balance, and term in the calculator to see the actual projected change.
Simple break-even divides net closing costs by the monthly P&I savings: Break-even months = Net refinance costs divided by Monthly P&I savings. For example, $7,500 in net costs divided by $350 in monthly savings equals about 21 months. The cumulative break-even tracks total cost month by month on both paths accounting for different balances, payoff timelines, and term extensions. Simple break-even is quick; cumulative is more accurate when the term changes significantly. Both are displayed in this calculator.
Include all lender and third-party charges required to complete the refinance: origination charges, discount points, appraisal fee, credit report fee, title and settlement fees, recording and government fees, attorney fees where required, and prepaid interest for the partial first month. Escrow funding for property taxes and insurance is a prepaid deposit rather than a transaction cost and is tracked separately in this calculator. Lender credits offset transaction costs but may be linked to a higher rate. Compare the itemized Loan Estimate from each lender for the most accurate figures.
Paying upfront requires more cash at closing but keeps the new loan balance equal to the current payoff. Financing closing costs adds them to the balance, raises the monthly payment slightly, and accrues interest on those costs for the life of the loan. Lender credits reduce upfront cash but increase the monthly payment and total interest through a higher rate. The right choice depends on available cash, how long you plan to stay, and the net cost of each option. This calculator lets you model all three methods and compare total cost.
Only if you choose a new 30-year term. A refinance can use any term. Choosing a 30-year term when you have 25 years remaining adds five years to your payoff date. Those five extra years typically add more total interest even at a lower rate because you are paying interest for 60 additional months. This calculator always displays the current remaining term, the proposed new term, and the difference in payoff date so the extension is clearly visible.
Yes. A lower payment achieved by extending the loan term means more months of interest accrual, which often increases the total interest paid over the full term. Refinancing from 7.00% with 25 years remaining to 5.50% on a new 30-year term lowers the payment but extends the timeline by five years. Even at a lower rate, paying interest for 360 months instead of 300 can result in more total interest depending on the exact numbers. The calculator shows remaining interest on the current loan versus total interest on the proposed loan so you can compare lifetime cost, not just monthly payment.
A cash-out refinance replaces your current mortgage with a larger loan and pays the difference in cash at closing. This increases your mortgage balance, reduces home equity, and typically raises total interest paid. The cash received is a loan — not income or profit — and must be repaid with interest. A larger balance also raises the loan-to-value ratio, which may require mortgage insurance or affect the available rate. This calculator shows the new LTV, estimated equity remaining, and the additional interest cost of the larger balance.
Yes. Home equity is the difference between your home's estimated value and the outstanding mortgage balance. A cash-out refinance increases the mortgage balance, which directly reduces equity by the cash-out amount plus any financed closing costs. A higher balance also raises the LTV ratio, which may affect whether mortgage insurance is required. This calculator displays current equity, post-refinance equity, and the new LTV when you provide an estimated home value.
A cash-in refinance involves bringing extra cash to closing to pay down the loan balance, resulting in a new loan smaller than the current payoff balance. This can lower the monthly payment, reduce total interest, improve the loan-to-value ratio, and potentially eliminate mortgage insurance. The cash paid toward principal is tracked separately from closing costs in this calculator so you see the total cash required at closing as a combined figure alongside the monthly payment and interest savings.
Refinancing when you plan to move soon is typically difficult to justify financially. Closing costs that are not recovered through monthly savings before the sale are a net loss. If the simple break-even is 24 months and you plan to move in 18 months, you would pay the closing costs without fully recovering them. The expected-time-in-home section of this calculator computes the savings or net cost through your planned move date so you can see whether the transaction makes financial sense for your specific horizon.
No. This calculator uses only the numbers you enter and does not evaluate your credit history, income, employment, debt-to-income ratio, property value, LTV, or any other underwriting criterion a lender uses to approve a refinance. Results are educational planning estimates. Whether you will be approved for a refinance and at what rate depends on factors this calculator does not have access to. Contact a licensed mortgage lender for an actual rate quote, prequalification, or loan application based on your verified financial profile.
Possibly. If your current loan carries private mortgage insurance because the LTV is above 80%, a refinance may eliminate PMI if the new loan-to-value ratio falls below that threshold based on the current appraised value and new loan amount. A cash-in refinance can specifically bring the balance down to achieve a lower LTV. Enter your estimated home value and any cash-in amount to see the projected new LTV and whether it crosses the PMI removal threshold. Actual PMI removal depends on the lender, loan program, and a current appraisal.
A shorter term typically means a higher monthly payment but a substantially lower total interest cost and earlier payoff. Refinancing a $250,000 balance at 7.00% with 25 years remaining to a 15-year loan at a lower rate would raise the monthly payment but eliminate ten years of interest accrual. Whether the higher payment is manageable and whether the savings justify the closing costs depends on your budget and plans. This calculator models any term so you can compare the payment, total interest, and break-even for each scenario.
Discount points are upfront prepaid interest that buys a lower rate. One point equals 1% of the loan amount. Whether points are worthwhile depends entirely on how long you keep the new loan. If one point ($2,500 on a $250,000 loan) reduces your monthly payment by $30, the point-specific break-even is 83 months. If you stay beyond that, the rate reduction pays for itself; if you move or refinance sooner, you paid for a benefit you did not fully receive. This calculator includes discount points as a closing cost and factors them into the overall break-even calculation.
Sources and methodology
Monthly P&I payments are calculated using the standard fixed-rate amortization formula: Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P is the principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of months. This is the same formula used in the Mortgage Calculator. Break-even is computed using both simple division of net costs by monthly savings and a cumulative month-by-month comparison of total cost on each path. Cash-out proceeds are tracked separately and not counted as savings. All rates, balances, and costs are entered by the user — this calculator does not fetch live market rates. Actual lender fees, qualification rules, and available rates vary by lender, loan program, credit profile, and market conditions.
- CFPB: What is mortgage refinancing?
- CFPB: What is a Loan Estimate?
- CFPB: Discount points and lender credits explained
- CFPB: Closing on a refinance
- Freddie Mac: Refinancing and your costs
- Fannie Mae: Mortgage refinance options
- Fannie Mae: Cash-out refinance overview
Last reviewed: July 2026. Verify important decisions with a licensed mortgage professional or current lender guidance.
Related calculators
Disclaimer
This calculator provides an educational comparison based on user-entered assumptions. It does not constitute loan approval, mortgage advice, financial advice, tax advice, or a lending commitment. Actual rates, costs, payments, eligibility, payoff amounts, and loan terms must be confirmed with a lender.
Privacy
Calculator values are processed locally in your browser and are not intentionally transmitted to our servers. Website hosting, consent, analytics, and advertising services may process technical information as described in our Privacy Policy and Cookie Policy. This calculator does not require your name, email, phone, address, Social Security number, or mortgage account number. Information intentionally submitted through the Contact page is transmitted so your request can be handled.