Mortgage Refinance Calculator
Updated · By the CalculatorDash editorial team · How we check our maths
Quick answer
Refinancing pays off when monthly savings recover the closing costs before you sell or refinance again. Moving a $300,000 balance from 7.25% (28 years left) to a 6% 30-year loan with $6,000 of costs saves about $290 a month and breaks even in about 21 months.
How this calculator works
A refinance replaces your mortgage with a new one, usually to get a lower rate, a shorter term or cash out. You pay closing costs again, so the question is how long it takes for the lower payment to earn those costs back.
Watch the term. Resetting a loan with 28 years left to a new 30-year loan lowers the payment partly by stretching it out. The lifetime comparison shows whether you actually pay less overall, including closing costs.
The formula
- Payments
- standard amortisation: balance × r × (1 + r)^n ÷ ((1 + r)^n − 1) for each loan
- Break-even
- closing costs ÷ monthly saving
- Lifetime difference
- current payment × remaining months − (new payment × new months + closing costs)
Worked example
On a $300,000 balance, the current payment at 7.25% over 28 years is about $2,088. A new 30-year loan at 6% costs about $1,799, saving $290 a month. $6,000 of closing costs are recovered in about 21 months. Over the full terms the refinance costs about $48,000 less, closing costs included.
Tips
- 01Only refinance if you expect to stay past the break-even point.
- 02Ask lenders for a Loan Estimate so you can compare closing costs line by line.
- 03Keep your old payment after refinancing and the extra goes to principal, cutting years off the loan.
Frequently asked questions
When is refinancing worth it?
When the monthly saving recovers the closing costs well before you expect to move or refinance again, and the lifetime cost is lower.
How much does it cost to refinance?
Closing costs commonly run around 2–5% of the loan amount, depending on the lender, location and whether you buy points.
Does refinancing restart my loan?
Yes, a new loan starts a new amortisation schedule. Choosing a term close to the years you have left avoids stretching the debt out.
Can I roll closing costs into the loan?
Often yes, but you then pay interest on them. Add them to the balance in this calculator to see the effect.