Mortgage Refinance Calculator
Compare your current mortgage against a refinance offer: monthly payment change, lifetime cost difference, and break-even on closing costs.
How to Use
- Enter your current loan's remaining balance, its interest rate, and how many years remain on it.
- Enter the new interest rate and term you're considering, and the closing costs you'd pay out of pocket to refinance.
- The result shows both monthly payments, the monthly change, the lifetime cost difference between keeping your current loan and refinancing (closing costs included), and how many months it takes for the monthly savings to recover the closing costs — or a clear note if your new payment doesn't actually decrease.
Formula
- Current payment
- current_payment = current_balance × current_monthly_rate ÷ (1 − (1 + current_monthly_rate)^−current_months_remaining)
- New payment
- new_payment = current_balance × new_monthly_rate ÷ (1 − (1 + new_monthly_rate)^−new_months)
- Lifetime cost difference
- (new_payment × new_months + closing_costs) − (current_payment × current_months_remaining)
- Break-even months
- closing_costs ÷ (current_payment − new_payment) [only when the new payment is lower]
Worked Example
A $250,000 balance at 7% with 25 years remaining, refinanced into a new 30-year loan at 5.5% with $4,000 in closing costs.
- Current payment (25 years remaining at 7%): ≈ $1,766.95/month
- New payment (30-year term at 5.5%): ≈ $1,419.47/month
- Monthly change: $1,419.47 − $1,766.95 ≈ −$347.48 (a decrease)
- Break-even: $4,000 ÷ $347.48 ≈ 11.5 months
- Lifetime cost difference: (new loan's total cost + closing costs) − (cost of finishing out the current loan) ≈ −$15,074.30
Result: Monthly payment change: −$347.48 (decrease) / Lifetime cost difference: −$15,074.30 / Break-even on closing costs: 11.5 months
About This Tool
What this tool does
This calculator compares the cost of keeping your current mortgage as-is against refinancing into a new rate and term, including the effect of closing costs — showing the monthly payment change, the total lifetime cost difference between the two paths, and how many months it takes the monthly savings to pay back the closing costs.
When to use it
Use it whenever you're offered (or are considering) a refinance, to see past the smaller monthly payment alone and check whether the deal is actually cheaper over time — a lower payment doesn't always mean lower lifetime cost, especially when the new loan resets the clock to a longer term.
What the result means
A negative monthly payment change means your payment goes down; a negative lifetime cost difference means refinancing costs less overall than keeping your current loan (both are "good" directions here). Break-even is how long it takes your monthly savings alone to recover what you paid in closing costs — it does not account for the lifetime interest difference from a changed term.
Assumptions & limitations
Closing costs are modeled as paid out of pocket, not rolled into the new loan balance — if you plan to finance closing costs into the new loan, add that amount to the balance you refinance rather than entering it separately here, since rolling costs into the loan changes both the payment and the lifetime cost math. This tool doesn't account for tax deductions, PMI changes, or any fees beyond the closing costs you enter, and it is not a loan offer, rate quote, or refinance recommendation — a real refinance may include different exact costs and terms than what you enter here.