Mortgage Refinance Calculator — Break-Even & Savings
Enter your current loan balance, rate and remaining term, then the new rate and term, plus closing costs, to instantly see the monthly savings, how many months until you recoup the closing costs (the break-even), and the net lifetime savings over the life of both loans.
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months
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years
Reduction in monthly payment after refinancing
- 1
Current monthly payment
250,000 × 0.00625 × 4.4608 ÷ (4.4608 − 1) = 2,013.98 - 2
New monthly payment
250,000 × 0.005 × 3.3102 ÷ (3.3102 − 1) = 1,791.08 - 3
Monthly savings
2,013.98 − 1,791.08 = 222.91 - 4
Break-even point
5,000 ÷ 222.91 = 23 moMonths until the closing costs are fully recovered from monthly savings.
How does this calculator work?
Refinance saves monthly_savings = old_payment − new_payment per month. Break-even = closing_costs ÷ monthly_savings months. Net lifetime gain = old_total_interest − new_total_interest − closing_costs. Only refinance if you will stay past the break-even point.
Formula
How this is calculated
Refinancing replaces your existing mortgage with a new loan — ideally at a lower rate or shorter term. The new loan pays off the remaining balance of the old one, and you start fresh payments. The core question is whether the long-term interest savings outweigh the upfront closing costs (typically 2–5% of the loan balance).
The break-even point — Closing costs ÷ Monthly saving — tells you how many months you must stay in the property for the refinance to make financial sense. If you expect to sell or move before that point, refinancing likely costs more than it saves, even with a lower rate.
Net lifetime savings = (old total interest) − (new total interest) − (closing costs). This is the true economic gain assuming you hold both loans to maturity. Shortening the term while lowering the rate can produce large net savings even if the monthly payment drops only slightly. Note that rolling closing costs into the new loan balance increases the effective cost — this calculator assumes you pay closing costs upfront.
Frequently asked questions
Refinancing makes sense when the net lifetime interest savings exceed the closing costs and you plan to stay in the home past the break-even point. As a rule of thumb, a rate reduction of at least 0.5–1% is often needed to justify the costs, depending on loan size and remaining term.
Typical closing costs include origination fees, appraisal, title insurance, recording fees and potentially discount points. They commonly total 2–5% of the loan amount. Ask your lender for a Loan Estimate to get actual figures.
Shortening the term (e.g. from 30 to 15 years) combined with a lower rate can dramatically cut total interest paid, though the monthly payment rises. Extending the term lowers the payment but stretches interest costs — and can result in paying more in total even at a lower rate.
Also known as
TG we-Calculate Editorial Team. (2026). Mortgage Refinance Calculator — Break-Even & Savings [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/mortgage-refinance-calculator
TG we-Calculate Editorial Team. "Mortgage Refinance Calculator — Break-Even & Savings." TG we-Calculate. 2026. https://we-calculate.com/calculator/mortgage-refinance-calculator.
TG we-Calculate Editorial Team, "Mortgage Refinance Calculator — Break-Even & Savings," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/mortgage-refinance-calculator
@misc{wecalculate_mortgage_refinance_calculator, title = {Mortgage Refinance Calculator — Break-Even & Savings}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/mortgage-refinance-calculator}}, year = {2026}, note = {TG we-Calculate} }
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