Refinance Calculator
Compare your current mortgage with a new rate and term: the change in the monthly payment, the break-even month on closing costs and the interest on each loan. How it works
Use the Refinance Calculator
About the Refinance Calculator
Refinancing $300,000 from 6.5% with 25 years left to 5% for 30 years cuts the payment from $2,025.62 to $1,610.46, and $5,000 of closing costs are repaid by the lower payments in 13 months. The refinance calculator also adds up the interest still to pay on each loan: here interest plus closing costs come to $22,917.62 less with the new loan. It also shows each loan’s balance and interest paid after 1, 2, 5, 10 and 30 years.
Break-even months by rate drop and closing costs
| New rate | New payment | Payment falls by | $3,000 costs | $6,000 costs | $9,000 costs |
|---|---|---|---|---|---|
| 6.5% (0.5 points lower) | $2,025.62 | $94.72 | 32 months | 64 months | 96 months |
| 6% (1 point lower) | $1,932.90 | $187.44 | 17 months | 33 months | 49 months |
| 5.5% (1.5 points lower) | $1,842.26 | $278.08 | 11 months | 22 months | 33 months |
| 5% (2 points lower) | $1,753.77 | $366.57 | 9 months | 17 months | 25 months |
A $300,000 balance at 7% with 25 years left ($2,120.34 a month), refinanced into a new 25-year loan with the closing costs paid in cash. Break-even is the closing costs divided by the monthly drop in the payment, rounded up to a whole month.
How the new term changes the result
| New term | New payment | Payment change | Interest on the new loan | Interest plus costs, against the current loan | Break-even |
|---|---|---|---|---|---|
| 15 years | $2,451.25 | Rises $425.63 | $141,225.11 | $161,462.20 lower | Never |
| 20 years | $2,063.66 | Rises $38.04 | $195,279.26 | $107,408.05 lower | Never |
| 25 years | $1,842.26 | Falls $183.36 | $252,679.70 | $50,007.61 lower | 28 months |
| 30 years | $1,703.37 | Falls $322.25 | $313,210.43 | $10,523.12 higher | 16 months |
$300,000 at 6.5% with 25 years left ($2,025.62 a month and $307,687.31 of interest still to pay), refinanced at 5.5% with $5,000 of closing costs paid in cash. “Never” is what the tool shows when the payment does not fall, so there are no monthly savings to set against the costs.
Balance and interest paid over time, current loan against new loan
| After | Current: balance | Current: interest paid | New: balance | New: interest paid |
|---|---|---|---|---|
| 1 year | $295,046.71 | $19,354.15 | $295,573.97 | $14,899.49 |
| 2 years | $289,761.70 | $38,376.58 | $290,921.49 | $29,572.53 |
| 5 years | $271,686.61 | $93,223.81 | $275,486.53 | $72,114.13 |
| 10 years | $232,534.37 | $175,608.77 | $244,026.94 | $137,282.14 |
| 30 years | $0.00 | $307,687.31 | $0.00 | $279,769.69 |
The first-render example: $300,000 at 6.5% with 25 years left, against a new 30-year loan at 5% with $5,000 of closing costs paid in cash. The new loan pays the balance down more slowly but charges less interest each year; a loan that has ended shows a balance of $0.00 and all of its interest. The calculator shows this table for your own figures.
Frequently asked questions
- How do you calculate the break-even point on a refinance?
- Divide the closing costs you pay in cash by the monthly drop in the payment and round up. $5,000 of costs and a payment that falls by $415.16 give 13 months. With no closing costs the tool shows “Immediately”, and if the payment does not fall it shows “Never”. The saving only lasts while both loans are running, so when that month would come after the shorter loan has ended the tool shows “Not within the loan”: going from 6.5% to 6.4% on $300,000 over 25 years saves $18.70 a month, $5,610.00 in all, against $10,000 of costs.
- How much does a 1% lower rate save on a $300,000 mortgage?
- With 25 years left, going from 7% to 6% on a new 25-year loan lowers the payment by $187.44, from $2,120.34 to $1,932.90. With $6,000 of closing costs the break-even is 33 months, and interest plus costs are $50,227.36 lower over the 25 years.
- Does refinancing into a new 30-year loan cost more interest?
- It can, because the term starts again. $300,000 at 6.5% with 25 years left has $307,687.31 of interest to go. At 5.5% for a new 30 years the payment falls by $322.25, but the interest is $313,210.43, and with $5,000 of costs the new loan comes out $10,523.12 higher. At 5.5% for 25 years it comes out $50,007.61 lower.
- What if the closing costs are added to the new loan?
- Then nothing is due at closing and the costs are repaid with interest. In the $300,000 example at 5% for 30 years, adding $5,000 makes the new loan $305,000.00, the payment $1,637.31 instead of $1,610.46, and the interest and costs difference $18,258.90 instead of $22,917.62. No break-even month is shown, because no cash was paid.
- Can I use it if I know my payment but not the years left?
- Yes. Under “I know the current loan’s” choose the monthly payment. The field starts with the payment worked out from the years left, so replace it with the principal-and-interest part of your own payment. The tool walks the balance down month by month to find the time left: $2,025.62 on $300,000 at 6.5% comes out at 25 years. A payment that includes escrow for taxes and insurance would make the loan look shorter than it is.
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