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Refinance Calculator
Should you refinance? New payment, monthly savings, break-even point and lifetime interest compared.
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Should you refinance your mortgage? This refinance calculator compares your current loan with a new one: the new monthly payment, how much you save each month, the break-even point when the savings repay your closing costs, and the total interest over the life of each loan. It also handles cash-out refinancing and rolling costs into the loan.
How to Use the Refinance Calculator
- From your latest mortgage statement, enter the remaining balance, your current rate and the years left.
- Enter the new rate and term from a lender's Loan Estimate.
- Enter the closing costs (often 2%–6% of the loan) and tick the box if you will add them to the new loan.
- For a cash-out refinance, enter the cash out amount.
Break-Even Point
Break-even months = closing costs ÷ monthly savings. If you sell or refinance again before then, the refinance cost you money.
Example: you owe $300,000 at 7.25% with 27 years left, so your principal and interest are $2,112.58. A new 30-year loan at 6.125% costs $1,822.83 – $289.75 a month less. With $6,000 of closing costs, you break even after 6,000 ÷ 289.75 = 21 months. Over the full terms, you would pay about $22,000 less in total – even though the new loan runs 3 years longer.
Lower Payment vs Lower Total Cost
Restarting a 30-year clock lowers the payment but stretches the debt. A shorter term costs more each month but saves far more interest:
| $300,000 | Monthly P&I | Interest from now on |
|---|---|---|
| Keep current loan (7.25%, 27 yrs left) | $2,112.58 | $384,477 |
| Refinance to 30 years at 6.125% | $1,822.83 | $356,219 |
| Refinance to 15 years at 6.125% | $2,551.87 | $159,337 |
15-year loans usually carry a lower rate than 30-year loans, so the saving is often larger than shown here.
When Refinancing Makes Sense
- The rate drop is meaningful – often at least 0.5 to 1 percentage point, depending on your balance and costs.
- You'll stay past the break-even point.
- You want to drop PMI or FHA mortgage insurance because your home has gained value.
- You want to switch from an adjustable rate to a fixed rate, or shorten your term.
Cash-out refinancing turns home equity into cash, but the whole balance gets the new rate. If your current rate is low, a HELOC may cost less. VA borrowers can use a streamline IRRRL with a 0.5% funding fee.
Sources
- Federal Reserve – A consumer's guide to mortgage refinancings
- Freddie Mac – Primary Mortgage Market Survey
Last reviewed: October 2026 by the ShrinkBee team. Results are estimates for planning and education, not financial, tax, legal or medical advice.
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