Mortgage Refinance Calculator
A mortgage refinance calculator compares an existing loan with a proposed new mortgage. It estimates monthly savings, scheduled cost differences, and a simple closing-cost break-even period.
Quick answer
A lower rate does not automatically make refinancing worthwhile. Closing costs, a reset loan term, expected time in the home, and cash taken out can change the result.
Calculator
How to use this calculator
- Enter the current payoff balance, rate, and months remaining.
- Enter the proposed rate, term, closing costs, and any cash-out.
- Compare payments, break-even, and scheduled cost.
- Recalculate with costs paid in cash if that is an option.
Explanation
What it is
A mortgage refinance calculator compares an existing loan with a proposed new mortgage. It estimates monthly savings, scheduled cost differences, and a simple closing-cost break-even period.
How it works
The calculator amortizes the current balance under the remaining existing term and under the proposed new rate and term. Closing costs and cash-out are added to the new principal for this comparison.
When to use it
Use the mortgage refinance calculator when comparing options, setting a realistic target, or checking whether a proposed financial decision fits your broader plan.
Limitations
- The result is an estimate based on the amounts, rates, timing, and assumptions entered.
- Actual product terms, taxes, fees, eligibility rules, and market conditions can change the outcome.
- Use official disclosures or a qualified professional before making a binding financial decision.
Key terms
- Rate-and-term refinance
- A refinance mainly changing interest rate or repayment term.
- Cash-out refinance
- A new mortgage larger than the current payoff, providing cash to the borrower.
- Closing costs
- Lender, appraisal, title, recording, tax, and other transaction charges.
- Break-even
- The period required for payment savings to recover specified costs.
Formula
The calculator amortizes the current balance under the remaining existing term and under the proposed new rate and term. Closing costs and cash-out are added to the new principal for this comparison.
Worked example
On a $300,000 balance, reducing rate by one percentage point may lower payment, but financing $9,000 of costs and restarting a 30-year term can alter long-term savings.
FAQ
When is refinancing a mortgage worth it?
It may make sense when payment or risk benefits exceed costs and you expect to keep the loan beyond the relevant break-even period.
How much lower should the new mortgage rate be?
There is no universal threshold. Balance, remaining term, costs, tax situation, and how long you keep the loan matter.
Should I roll closing costs into the new loan?
Financing costs preserves cash but increases principal and interest. Compare both cash-paid and financed scenarios.
Why can total cost rise even when my payment falls?
A longer replacement term can spread payments over more years and increase total interest.
Does this include taxes and insurance?
No. It compares principal and interest because property taxes and insurance may continue regardless of lender, although escrow amounts can change.
Common mistakes
- Using an advertised rate without checking whether it applies to the full balance or term.
- Leaving out fees, taxes, timing differences, or irregular cash flows.
- Treating a planning estimate as a guaranteed quote or final professional calculation.
Tips
- Run a conservative scenario as well as an optimistic one.
- Change one assumption at a time so you can see what drives the result.
- Save or export the calculation and update it when rates, costs, or goals change.
Sources and editorial review
Educational estimates only; not personalized financial, tax, legal, lending, investment, or insurance advice.