Mortgage Refinance Calculator

Should I Refinance My Mortgage?

Refinancing replaces your existing mortgage with a new one — ideally at a lower interest rate or a shorter term. Done right, it can save you hundreds of dollars per month and tens of thousands of dollars over the life of the loan. But it comes with closing costs, and it only makes sense if you stay in the home long enough to recover them.

The key metric is the break-even point: how many months it takes for your monthly savings to equal your closing costs. If you plan to stay past the break-even point, refinancing puts money in your pocket. If you move before then, you lose money on the deal.

How to Use This Mortgage Refinance Calculator

The 0.75% Rate Drop Rule

A widely used rule of thumb in mortgage banking is that a rate drop of at least 0.75 percentage points is needed to make a refinance worth the cost and hassle for most borrowers. At that level, the monthly savings are meaningful enough to recover typical closing costs within a reasonable timeline — usually 4 to 6 years on a standard loan.

That said, the rule is a starting point, not a hard cutoff. A 0.5% drop on a $500,000 loan creates much more savings than a 0.5% drop on a $100,000 loan. And if you are refinancing from a 30-year to a 15-year, the total interest savings can be enormous even if the rate barely moves. Always look at your specific numbers — that is exactly what this calculator is for.

Rate Refinance vs. Term Refinance

When Not to Refinance

When Does Refinancing Make Financial Sense?

Refinancing makes sense when the monthly savings exceed the closing costs within a timeframe you plan to stay in the home. A common rule of thumb: refinance if you can lower your rate by at least 0.75%–1%. But the break-even period is what really matters — if you plan to move in 3 years and your break-even is 4 years, refinancing actually costs you money despite the lower rate. Use this mortgage refinance calculator to find your exact break-even point. Other good times to consider refinancing: if your credit score has improved significantly since you took out your loan, if you want to switch from an ARM to a fixed rate, or if you want to shorten your term and build equity faster.

Types of Mortgage Refinance

Rate-and-term refinance changes your interest rate or loan term without taking cash out — this is the most common type and the one this calculator is designed for. Cash-out refinance replaces your existing loan with a larger one and gives you the difference as cash, which you can use for home improvements or debt consolidation (see our Cash-Out Refinance Calculator for that scenario). Streamline refinance is a simplified process available for FHA and VA loans that requires less documentation and can be faster to close. Each type serves a different purpose, and the right choice depends entirely on your financial goals and current situation.

Refinancing Costs You Shouldn't Overlook

Closing costs on a refinance typically run 2–5% of the loan amount — that's $4,000–$10,000 on a $200,000 loan. Some lenders offer no-closing-cost refinances, but they roll the costs into your rate or loan balance — you still pay them, just over time. Also consider the impact of resetting your loan term: if you're 5 years into a 30-year mortgage and you refinance into a new 30-year loan, you're extending your payoff date by 5 years. Even at a lower rate, you may pay more total interest because you've reset the clock on your amortization schedule. This mortgage refinance calculator accounts for remaining term so you can see the full picture.