Use FinanceMaxing's free Mortgage Refinance Calculator to see whether refinancing is worth it. Enter your current loan and a new rate to compare your new monthly payment, your monthly savings, how many months it takes to break even on closing costs, and how much interest you'd save over the life of the loan.
The figures below compare the full lifetime cost of keeping your current loan versus the new one, so you can see the long-term picture — not just the monthly change.
Current Monthly Payment
$0
Lifetime Interest Saved
$0
Net Savings After Costs
$0
Assumes a rate-and-term refinance (new balance equals your current balance) and a fixed rate with no prepayment penalty. "Net Savings After Costs" subtracts your closing costs from the lifetime interest saved.
About the Mortgage Refinance Calculator
The Mortgage Refinance Calculator helps you answer one question: is refinancing actually worth it? Lowering your interest rate can shrink your monthly payment and save tens of thousands in interest — but refinancing isn't free. Closing costs mean a refinance only pays off if you keep the loan long enough to recover those costs. This tool compares your current mortgage against a new rate and term and shows your new payment, your monthly savings, the break-even point, and your total interest saved.
Formula Used
Both the current and the new payment use the standard fixed-rate amortization formula:
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Where: M = monthly payment P = loan balance (principal) r = monthly interest rate (annual rate ÷ 12 ÷ 100) n = number of payments (years × 12)
Suppose you owe $300,000 at 7% with 30 years remaining, and you can refinance into a new 30-year loan at 5.5% with $6,000 in closing costs:
Current payment ($300k, 7%, 30yr) ≈ $1,995.91 / mo
New payment ($300k, 5.5%, 30yr) ≈ $1,703.37 / mo
Monthly savings = 1,995.91 − 1,703.37 = $292.54
Break-even = $6,000 ÷ $292.54 ≈ 21 months
Lifetime interest saved ≈ $105,314
Net savings after $6,000 costs ≈ $99,314
In this case you'd recover the closing costs in under two years and save roughly $99,000 over the life of the loan — a clear win if you stay in the home past the 21-month break-even.
When Refinancing Is Worth It
You'll stay past the break-even point. If you might sell or move before you recover the closing costs, the refinance loses money. This is the single most important factor.
The rate drop is meaningful for your balance. A 0.5%–1% drop is a common rule of thumb, but a smaller drop can still pay off on a large balance, and a large drop may not pay off on a small one. Always check the actual break-even.
You're not resetting the clock for no reason. Refinancing a loan you're 8 years into back to a fresh 30-year term lowers the payment but can increase total interest. Consider refinancing into a shorter term to capture the rate savings without extending the payoff.
Your credit and equity qualify you for the best rate. The advertised rate isn't always the rate you'll get — a strong credit score and at least 20% equity (to avoid PMI) help you secure it.
How a Lower Rate Changes Your Payment
On a $300,000 balance over 30 years, here's how much each rate reduction saves per month:
Refinance Scenario
New Payment
Monthly Savings
7.0% → 6.5%
~$1,896
~$100
7.0% → 6.0%
~$1,799
~$197
7.0% → 5.5%
~$1,703
~$293
Rate-and-Term vs. Cash-Out
This calculator models a rate-and-term refinance, where your new balance equals your current balance and only the rate/term change. A cash-out refinance increases the balance so you can take equity as cash — to model that here, simply add the cash amount to your current balance. For tapping equity without resetting your first mortgage, a HELOC or home equity loan may cost less.
Disclaimer
This tool provides general estimates for informational purposes only and is not financial advice. It assumes a fixed-rate, rate-and-term refinance with no prepayment penalty; your actual rate, closing costs, and terms will come from your lender's Loan Estimate. Confirm all figures with your lender before deciding. To check whether you'll still owe PMI, use the PMI Calculator, and to re-check affordability, the Home Affordability Calculator.
Frequently Asked Questions
How does a mortgage refinance calculator work?
It calculates the monthly payment on your current loan (from your balance, rate, and years remaining) and the payment on a new loan at the rate and term you enter, then compares them. It uses the standard amortization formula lenders use. From the two payments it derives your monthly savings, the break-even point on your closing costs, and the difference in total interest over the life of each loan.
What is the break-even point on a refinance?
The break-even point is how long it takes for your monthly savings to repay your closing costs. If refinancing costs $6,000 and saves you $300 a month, you break even in 20 months ($6,000 ÷ $300). Refinancing generally makes sense if you'll keep the home well beyond the break-even point; if you might sell or move before then, the upfront cost may not pay off.
How much should rates drop before I refinance?
A common rule of thumb is at least 0.5% to 1% below your current rate, but the real test is the break-even point, not the rate gap alone. A smaller drop can still be worth it on a large balance, while a bigger drop may not pay off on a small balance with high closing costs. Run your actual numbers — this calculator shows the break-even months directly.
Does refinancing reset my loan term?
Usually yes. A refinance replaces your old loan with a new one, so a new 30-year loan restarts the 30-year clock. That lowers your payment but can increase total interest if you were already several years into the old loan. To avoid that, refinance into a shorter term (for example, 30 years remaining into a new 15- or 20-year loan) — this calculator will show the higher payment but the larger lifetime interest savings.
What are typical mortgage refinance closing costs?
Refinance closing costs typically run about 2% to 6% of the loan amount, covering lender origination, appraisal, title, and prepaid items. On a $300,000 loan that's roughly $6,000 to $18,000. Always enter your actual estimated costs (from your Loan Estimate) for an accurate break-even — they make a big difference in whether the refinance pays off.
What is the difference between a rate-and-term and a cash-out refinance?
A rate-and-term refinance keeps your loan balance the same and just changes the rate and/or term to lower your payment or pay off faster. A cash-out refinance increases the loan balance so you can take equity as cash, which raises your payment and interest. This calculator models a rate-and-term refinance (new balance equals your current balance); for cash-out, add the cash amount to the current balance you enter.
Will refinancing hurt my credit score?
Refinancing causes a hard inquiry and opens a new account, which can dip your score a few points temporarily. Rate-shopping multiple lenders within a short window (typically 14–45 days) usually counts as a single inquiry. The effect is generally small and short-lived compared with the long-term savings a good refinance can produce.