Refinance Calculator

Monthly relief is not the same as saving money

Extending a mortgage can reduce the payment while leaving you with more debt at the same future date. The payment-savings payback divides upfront fees by the monthly payment reduction, rounded up to a whole month. It measures cash flow only. It does not prove the refinance is cheaper, and is not valid beyond either loan’s payoff.

Compare at the same exit date

The exit comparison adds the principal-and-interest payments made and the balance still owed for each option, then adds upfront refinance fees to the new loan. Because both options start with the same principal, the difference equals interest on the current loan minus interest on the new loan minus fees. Principal repaid is not counted as a cost.

What to enter for closing costs

Use your actual quoted one-time costs, including points and any applicable payoff penalty, minus lender credits. Do not treat refundable escrow deposits or recurring taxes and insurance as refinance fees. Keep a separate cash-to-close budget. A “no-closing-cost” offer can instead use a higher rate or a larger loan; financed fees and cash-out are outside this calculator’s equal-balance model.

Method and limits

For balance P, monthly rate r and n payments, the fixed payment is M = P × r / [1 − (1 + r)^−n]. At a zero rate, M = P / n. After m payments, the remaining balance is the present value of the remaining n − m payments; payments stop at payoff. Interest paid equals payments made minus principal repaid. Figures use unrounded monthly calculations and are rounded only for display.

What this estimate does not include

This is a U.S. fixed-rate, equal-balance comparison with fees paid upfront. It does not model cash-out, financed fees, adjustable rates, extra payments, changed PMI, taxes, insurance, tax deductions, investment returns or the time value of money. Different payment timing can matter. A lifetime comparison keeps each loan to its own payoff, not to the same date. Use the exit result for an earlier sale and confirm all terms with your lender.

Frequently Asked Questions

How do I tell whether refinancing saves money?

Compare interest and upfront fees over the time you expect to keep the loan, and account for the balance owed at that same date. A lower monthly payment or a short payment-savings payback alone does not show that the refinance is cheaper.

How much does it cost to refinance a mortgage?

There is no single price. Use your lender’s quoted origination, points, appraisal, title, recording and other applicable one-time costs, minus lender credits. Keep escrow deposits and recurring taxes or insurance separate. This tool assumes fees are paid upfront, not borrowed.

What is the break-even point on a refinance?

Simple payment-savings payback is upfront costs divided by the monthly payment reduction, rounded up. For example, $4,500 divided by $190 is about 24 months. This is a cash-flow measure, not an economic break-even: different principal repayment and remaining balances can change the outcome.

Does refinancing restart my loan term?

The new loan follows the new term you choose. A new 30-year term can lower payments but add interest compared with a loan that has only 20 years left. Compare both the lifetime after-fee result and the result at your planned exit.

Can this calculator compare a no-closing-cost refinance?

If a lender covers all upfront costs through a higher rate, enter that offered rate and zero upfront costs. If the fees are added to the loan balance, this calculator does not model that offer: it assumes the same starting balance for both loans.

Can a shorter-term refinance save money if the payment rises?

Yes, it can reduce interest even when there are no monthly payment savings. Compare interest and upfront fees at your planned exit and over each loan’s full term, then check whether the higher payment fits your budget.

References and methodology

• CFPB — Read a Loan Estimate
• CFPB — How no-closing-cost loans work
• dibobo — Calculation methods and corrections

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