A walkthrough, end to end.
- 1
Enter your current loan details (balance, rate, remaining term).
- 2
Enter the proposed refinance terms (new rate, new term, closing costs).
- 3
The calculator returns your monthly savings, the break-even month (when savings exceed closing costs), and total interest difference over the new loan.
Refinance break-even
Compute the monthly payment difference between current and proposed loans. Break-even month = closing costs ÷ monthly savings. If you'll stay in the home past break-even, refinancing pays off; if you'd sell sooner, the closing costs eat the savings.
What you can do with this.
Lower-rate refinance
Going from 7% to 5.5% on a $300K loan saves ~$280/mo. With $4,000 in closing costs, you break even in ~14 months — easily worth it if you'll stay 3+ years.
Cash-out refinance
Borrow more than you owe and take the difference in cash. New balance is higher; new payment is higher. Useful for major projects or debt consolidation but worth comparing against HELOC or personal loan first.
Shortening the term
Refinance from a 30-year to a 15-year at a lower rate. Monthly payment goes up but you build equity dramatically faster and pay massively less interest. Common move when interest rates drop substantially.
Cash-in refinance
Pay down principal at refinance to bring equity above 20% and eliminate PMI. Saves the PMI cost (~0.3–1.5% annually) and may unlock a slightly better rate too.
ARM to fixed-rate refinance
Lock in a fixed rate before your ARM resets to higher levels. Even if the fixed rate is slightly higher than the current ARM rate, predictability often wins for budgeting purposes.
When NOT to refinance
If you're moving in 1–2 years, closing costs almost certainly won't be recouped. If your new rate is less than 0.5–0.75% lower, savings are usually too thin to justify the time and money cost.
Closing cost rules of thumb
Typical refinance closing costs: 2–4% of loan amount. Get Loan Estimates from 3+ lenders and compare side-by-side — fees vary widely between lenders. No-cost refi means costs are rolled into rate, not eliminated.
Refinance calculator 2026 — what's current
Many homeowners with 2020-2022 era 3% mortgages are 'rate-locked' — refinancing to current ~6.5–7% rates would raise their payment. Refinance volume hit decade lows in 2024–2025; tracking rate moves is critical for those still paying older higher rates.
Frequently asked.
Old rule of thumb was 1%+; modern guidance is 0.5%+ if you'll stay 3+ years. The break-even calculation in the calculator gives the exact answer for your situation.
Lowers payment but resets the amortization clock — you pay much more total interest. Better to refinance to a similar remaining term, or use a shorter term if affordability allows.
No — costs are paid by accepting a slightly higher rate (~0.25%). Math out the long-term cost of the higher rate vs. paying closing fees upfront. Often 'no-cost' wins for short stays, paying upfront for long stays.
FHA, VA, and USDA loans offer streamline refinance with reduced documentation and often no appraisal. Available only for certain loan types and requires you currently have one of these loans.
No. Calculations run entirely in your browser.