Quick answers
What is a mortgage refinance calculator?
A mortgage refinance calculator compares your current mortgage with a new loan offer to estimate the trade-offs of refinancing. It works out the new monthly payment, the monthly saving, the break-even point on closing costs, the payoff date, the interest difference, and the total cost over the life of each loan, so you can see whether a refinance saves money or only lowers the payment.
How is refinance break-even calculated?
Break-even is the cash you pay to refinance divided by the monthly payment saving, rounded up to the next month. If closing costs are $6,000 and the new payment saves $300 a month, you break even in 20 months. Before that point you are still recovering the cost; after it, the lower payment works in your favour. With no monthly saving, there is no payment-driven break-even.
Is refinancing worth it if the payment is lower?
Not always. A lower payment helps monthly cash flow, but it can come from resetting the loan to a longer term, which adds years of interest. Refinancing is most worthwhile when the payment drops, you stay past the break-even point, and the total cost over the life of the loan also falls. Check the lifetime cost and your planned stay, not just the monthly figure.
Why can refinancing cost more over time?
Because resetting the clock matters as much as the rate. If you have 25 years left and refinance into a fresh 30-year loan, you add five more years of payments. A lower rate spread over a longer term can still increase the total interest you pay. The calculator shows this as an estimated extra lifetime cost even when the monthly payment is lower.
Should I refinance into a new 30-year loan?
A new 30-year term gives the lowest monthly payment, but it usually raises total interest by extending the loan. If freeing up monthly cash is the goal, it can help. If paying less overall is the goal, compare the same remaining term or a shorter term, which capture the rate benefit without resetting the clock. The same-term comparison shows the true rate effect.
What closing costs should I include?
Include lender or origination fees, title and escrow, appraisal, recording, and any other closing costs, plus discount points if you pay them. How you pay matters too: paying cash, rolling the costs into the balance, or choosing a no-closing-cost rate each change the upfront cash and the lifetime cost. Enter them all so the break-even and lifetime figures reflect the real deal.
How do points affect refinance savings?
Discount points are an upfront fee — one point is one percent of the loan — that buys a lower interest rate. Points can lower the lifetime cost if you keep the loan long enough to recover them, much like a second break-even. If you might move or refinance again soon, paying points is often not worth it. Toggle points on and off to compare.
What is a no-closing-cost refinance?
A no-closing-cost refinance means the lender covers the closing costs, usually in exchange for a slightly higher interest rate or by adding the fees to the balance. It removes the upfront cash, so the cash break-even is immediate, but the cost does not disappear — it moves into a higher rate or a larger loan, raising the lifetime cost. Compare both ways before choosing.
How does cash-out change the calculation?
A cash-out refinance lets you borrow against your equity and take the difference as cash, which increases the loan balance and the total interest you pay. The cash you receive is borrowed money, not free. The calculator separates the refinance savings from the cash-out borrowing, and a cash-out loan may also carry a different rate than a simple rate-and-term refinance.
What should I compare before refinancing?
Compare the new payment against your current payment, the break-even point against how long you plan to stay, and the total lifetime cost of both loans — not just the monthly figure. Look at the same-term option to isolate the rate benefit, include all closing costs and points, and confirm the rate and fees on a lender Loan Estimate before deciding.