Refinance Calculator
U.S. Flagship #03Loans & MortgagesShould you refinance your mortgage?
Current vs. new loan
Enter your current loan balance to begin.
Advanced options
Enter your current loan balance to begin.
How this is calculated
- 1Current payment on $0 at 0.00% over 0 yrs: $0/mo
- 2New payment on $0 at 0.00% over 0 yrs: $0/mo
- 3Monthly saving = current − new payment: $0 − $0 = $0
- 4Economic break-even is the first month the rate-and-term refinance's payments plus payoff and costs no longer exceed the current loan: Immediately
- 5At 7 yrs, current payments plus payoff total $0; the rate-and-term refinance plus all costs totals $0; net benefit = $0.
- 6Net lifetime = interest saved − closing costs: $0 − $0 = $0
Balance over time
Year-by-year comparison
| Year | Current balance | New balance | Interest paid (current) | Interest paid (new) |
|---|---|---|---|---|
| Now | $0 | $0 | $0 | $0 |
| 1 | $0 | $0 | $0 | $0 |
Cumulative interest paid on each loan, with both amortizing on their own schedule.
Formulas
| Metric | Formula | Your value |
|---|---|---|
| Current monthly payment | Amortize the balance at the current rate | $0 |
| New monthly payment | Amortize the new loan at the new rate | $0 |
| Monthly saving | Current payment − new payment | $0 |
| Break-even | First month current cost ≥ refinance cost, including payoff balances and all closing costs | Immediately |
| Net benefit at planned exit | Current scheduled payments + payoff − refinance scheduled payments − payoff − closing costs | $0 |
| Net lifetime saving | Interest saved − closing costs | $0 |
Your inputs
| Input | What it is | Your value |
|---|---|---|
| Current loan balance | Balance still owed on the current loan | $0 |
| Current interest rate | Rate on your current loan | 0.00% |
| Years remaining | Years left on the current loan | 0 yrs |
| New interest rate | Rate quoted on the refinance | 0.00% |
| New loan term | Term of the new loan | 0 yrs |
| How long you'll keep the loan | Years until you expect to sell, pay off, or refinance again | 7 yrs |
| Closing costs | Upfront cost to refinance | $0 |
Know what this estimate is based on
- Jurisdiction
- United States mortgage-refinance planning model
- Rules and time period
- User-entered planning assumptions; current and proposed rates and closing costs are not live quotes.
- Scope and limitations
- Break-even and lifetime-cost estimate only. Compare how long you expect to keep the loan, closing costs, points, term reset, taxes, escrow, and any prepayment consequences before refinancing.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter your current loan balance, current interest rate and the years remaining, then the new rate, the new loan term and the closing costs.
- 02
Open Advanced to add a cash-out amount, choose whether to pay the closing costs in cash or roll them into the loan, and set the rate a no-closing-cost deal would charge.
- 03
Read the monthly saving, break-even month, net lifetime saving and verdict, then weigh the term-options table, the no-cost comparison and the year-by-year amortization race.
Formula
The calculator prices two amortizing loans and compares them. Every payment uses the standard formula M = P × i × (1 + i)^n ÷ ((1 + i)^n − 1), where P is the loan amount, i is the annual rate ÷ 12, and n is the term in months. The current payment comes from your balance at your current rate over the years remaining; the new payment comes from the new loan amount — your balance plus any cash-out plus any closing costs you choose to finance — at the new rate over the new term. Monthly saving = current payment − new payment, and it can be negative when cash-out or a shorter term lifts the payment. Break-even = the closing costs paid in cash ÷ the monthly saving, the months of saving it takes to earn the fees back. The lifetime figures are term-aware, so a longer or shorter term cannot flatter them: the tool builds a rate-and-term 'shadow' loan that excludes any cash-out, then lifetime interest saved = the interest still owed on the current loan − the interest on that shadow loan, and net lifetime saving = lifetime interest saved − the full closing costs. Any cash-out is judged separately — its share of the new payment and of the new loan's interest is reported as the real cost of the cash. The no-closing-cost option re-prices the same balance at a higher rate with zero upfront cost and finds the month the paid-cost deal overtakes it. With the defaults — a 3,000,000 balance at 6% with 25 years left versus 4.5% over a new 25 years and 50,000 of costs — that is a 19,329 current payment, a 16,675 new payment, a 2,654 monthly saving, a break-even near 19 months, 796,220 of interest saved and a 746,220 net lifetime saving.
Example
Take the defaults: a 3,000,000 balance, a 6% current rate with 25 years left, a 4.5% new rate over a fresh 25 years, and 50,000 of closing costs paid in cash. The current payment on 3,000,000 at 6% over 300 months is about 19,329; re-pricing the same balance at 4.5% over the same 300 months drops it to about 16,675, a monthly saving of 2,654. Divide the 50,000 of costs by that saving and you break even in about 19 months. The interest still owed on the old loan is about 2,798,713, while the new loan charges about 2,002,492, so you save roughly 796,220 of interest; after the 50,000 of costs the net lifetime saving is 746,220 — the headline. The term-options table re-prices the new rate over 10, 15, 20, 25 and 30 years: a 15-year payoff lifts the payment to about 22,950 but slashes interest, while stretching to 30 years lowers the payment to about 15,201 and still nets about 276,511. Now open Advanced and add a 500,000 cash-out: the new loan grows to 3,500,000, the payment rises to about 19,454 (just above today's), and the tool attributes about 2,779 a month and 333,749 of lifetime interest to the borrowed money, so the 500,000 you pocket truly costs about 833,749 over the life — while the rate-and-term saving of 746,220 stays put, because the cash-out is judged on its own.
Definitions
- Current loan balance
- What you still owe today — the principal the current payment is built on and the figure the refinance starts from (0 to 30,000,000).
- Current interest rate
- The annual rate on your existing loan, divided by 12 to price the payment you make now (0% to 20%).
- Years remaining
- Years left on your current loan, used to price your current payment and the interest you still owe (1 to 40 years).
- New interest rate
- The annual rate quoted on the refinance, divided by 12 to price the replacement payment (0% to 20%).
- New loan term
- The length of the new loan, which can match, shorten or extend the years remaining — changing it is a deliberate trade between payment and interest (1 to 40 years).
- Closing costs
- The upfront cost of refinancing — appraisal, origination, title and recording — that the monthly saving must first earn back (0 to 2,000,000).
- Cash-out amount
- Extra cash borrowed on top of the balance, added to the new loan and analysed separately as its own borrowing cost (0 to 10,000,000).
- Finance closing costs
- Whether the fees are paid in cash or rolled into the new balance; rolling them in means no money down but a larger loan and a little more interest.
- Monthly saving
- Current payment − new payment; negative when cash-out or a shorter term raises the bill.
- Break-even
- Cash closing costs ÷ monthly saving — the months of saving needed to recover the fees.
- Net lifetime saving
- Interest saved on the rate-and-term debt minus the full closing costs — the honest bottom line, term and all.
Good to know
How swapping the rate alone lowers the payment
At its simplest a refinance does one thing extremely well: it takes the balance you still owe and re-prices the monthly bill at a cheaper rate. Leave the term equal to the years you have left — 25 against 25 in the default — and nothing but the rate changes, which is the cleanest way to judge an offer. At 6% the 3,000,000 balance carries a payment near 19,329; at 4.5% over the same 300 months it falls to 16,675, and the 2,654 gap is money the lower rate frees up every month for as long as you hold the loan. The reason a small-looking rate cut produces such a large monthly figure is the size of the balance: interest is charged on every one of those 3,000,000, so shaving 1.5 percentage points removes interest on a very large number. This is also why refinancing matters most when the balance is still high — early in a long mortgage, when most of the principal is intact, the same rate cut frees far more cash than it would near the end. Because the term is held equal here, the saving is genuine and not borrowed from stretching the payoff: you pay the same loan off on the same schedule, just at a lower price. That clean comparison is the foundation every other number builds on, and you can deliberately depart from it — changing the new loan term, taking cash out, or financing the fees — to see exactly what each move costs. To know your current payment before you start, the mortgage and loan calculators rebuild it from your original terms.
Earning back the closing costs: the break-even month
Refinancing is never free, and the upfront cost is the hinge the whole decision turns on. Appraisal, origination, title work, and recording fees here total 50,000, and that money is spent the day the new loan funds, long before any saving accrues. The break-even month answers the only question that matters about it: how many months of the 2,654 saving does it take to get the 50,000 back? The arithmetic is a single division — 50,000 ÷ 2,654 — which lands at roughly 19 months, and the break-even timeline on the results card draws that recovery period against the rest of the term. Read literally, it means that for the first year and a half the refinance is underwater. Keep the loan only twelve months and you have saved about 2,654 × 12 ≈ 31,849 but spent 50,000, leaving you roughly 18,151 in the hole; the crossover comes a little past the eighteen-month mark, and from then on every additional month is clear profit. This is why your expected holding period, not the rate or the saving, is usually the deciding factor. A spectacular monthly saving paired with steep costs can still be a loss if you sell or refinance again before break-even, while a modest saving with low costs pays off quickly because the bar is so low. The break-even also frames the risk symmetrically: anything that shortens your time in the loan — a job relocation, a trade-up to a larger home, a second refinance when rates fall further — eats into the lifetime saving and can push you back below the line. Before signing, the honest test is whether you are confident you will hold this loan well past month nineteen.
Monthly saving versus the true lifetime number
It is easy to fixate on the 2,654 a month, because it is the figure that hits your bank statement and the one lenders advertise. But the monthly saving and the true saving are different quantities, and confusing them leads to bad decisions. The net lifetime saving folds in two things the monthly figure ignores: the 50,000 of costs you paid to obtain it, and the interest you actually avoid over the loan's life. The tool computes it carefully — interest still owed on the old loan minus interest on the new one, less the closing costs — rather than by a quick multiplication, precisely so it stays honest when you change the term or take cash out. In the equal-term default the two views happen to coincide: 2,654 × 300 − 50,000 works out to the same 746,220 the interest comparison gives, because over identical schedules the monthly gap and the interest gap are the same thing. Change the new term, though, and they diverge — a longer term lowers the monthly saving's reliability as a lifetime gauge, which is why the tool always reports the interest-based figure. The practical lesson is to never judge a refinance by the monthly drop alone. Two offers with the same 2,654 saving are not equal if one costs 50,000 and the other 120,000, and neither is worth much to someone who will move in a year. The net lifetime number, shown alongside a verdict, reconciles all of that into one comparable figure, and it is the one to optimize when you line up competing quotes over the period you realistically expect to hold the loan.
The hidden cost of restarting a fresh long term
The new loan term is yours to set, and that freedom is also the most common refinance trap. Many lenders quote the refinance as a brand-new 30-year loan, and the payment they show looks wonderful — but a chunk of that drop has nothing to do with the lower rate. It comes from spreading the balance over more years. Stretch the default to 30 years and the payment falls from 16,675 to about 15,201, a bigger monthly saving; but you have added five years and returned to the opening stretch of the schedule, where each payment is mostly interest again. The term-options table makes the trade explicit, pricing 10, 15, 20, 25 and 30 years side by side with each one's payment, total interest and net lifetime saving. When the rate cut is large, as here, even the 30-year still nets a positive 276,511 — the lower rate outweighs the extra years. But narrow the rate gap and that same term extension flips negative, because you are paying interest for longer on a slowly shrinking balance. That is why the table reports total interest and a verdict for every term, not just the payment: a longer term that lowers the bill while raising lifetime cost earns a cautious verdict, so you can buy cash-flow relief with eyes open rather than mistaking a re-amortized loan for a genuine rate saving. The amortization race below shows the same story visually — the longer new loan's balance line stays above the current one's for years before it crosses.
Lender credits and no-closing-cost refinances
The 50,000 of closing costs does not have to be paid in cash, and the tool models both alternatives directly. In a no-closing-cost refinance the lender covers the fees in exchange for a higher rate — a credit you repay slowly through a smaller monthly saving. The no-closing-cost comparison card quantifies the trade: paying the costs buys the full 4.5% rate and a 2,654 monthly saving, while a no-cost 5% rate saves only about 1,791 a month but costs nothing today. It then finds the crossover — about 58 months here — where the paid-cost deal's cumulative saving overtakes the no-cost one, and names the winner for a full-term hold. Paying the fees wins for borrowers who stay a long time, because the lower rate compounds across many months; the no-cost route wins for those who expect to move or refinance again before the crossover. A close cousin rolls the fees into the balance instead of paying them at the table, and the Pay in cash / Add to loan toggle models exactly that. Roll the 50,000 in and you put no money down — break-even is immediate — but the loan grows to 3,050,000, the payment ticks up to about 16,953, and the extra interest trims the net lifetime saving from 746,220 to about 712,845. None of these options is free; they simply move the cost from upfront to ongoing, and the right one depends entirely on how long you will hold the loan and how much cash you want to keep at closing.
Refinancing to a shorter term to kill interest
Lowering the monthly payment is the obvious reason to refinance, but for some borrowers the better move runs in the opposite direction. If your goal is to pay less interest overall rather than to free up cash flow, set a shorter new term — replacing a loan with many years left with one that finishes sooner. Drop the default new term from 25 to 15 years and the payment climbs to about 22,950, more than your current bill, so the monthly saving turns negative; but the total interest over the loan's life collapses, and the net lifetime saving stays firmly positive. The term-options table flags this as a trade-off rather than a loss, because it wins decisively on lifetime cost even as it loses on cash flow. The mechanics are the mirror image of the long-term trap: a shorter schedule loads each payment with more principal and less interest, so the balance falls faster and far less interest accrues across the whole loan. This route suits borrowers whose income comfortably covers the larger payment and who would rather own the home outright sooner than keep cash loose each month. It pairs especially well with a rate drop, because the lower rate softens the payment increase a shorter term would otherwise impose. The discipline is valuable too — the higher required payment makes accelerated payoff automatic rather than relying on you to voluntarily overpay. Test both philosophies side by side: shorten the term for the interest-killing version, keep it for the cash-flow version, and let the net lifetime figure and verdict decide which goal you are really refinancing for.
Cash-out: turning equity into cash and counting its cost
A cash-out refinance replaces your loan with a larger one and hands you the difference, and the Advanced cash-out field models it without muddying the rate-and-term picture. Add a 500,000 cash-out to the default and the new loan grows to 3,500,000, lifting the payment to about 19,454 — just above today's 19,329 — so the monthly saving turns slightly negative even though the rate dropped. The crucial discipline is to judge the two motives separately, and the tool does this for you. It still reports the rate-and-term saving (746,220) untouched, because that is what the lower rate is worth on the debt you already had. Then it prices the borrowed cash on its own: about 2,779 of the new payment and 333,749 of lifetime interest are attributable to the cash-out, so the 500,000 you pocket truly costs about 833,749 over the life — the principal plus its interest. Read that way, the question is no longer the headline rate but whether the use of the cash justifies that cost. Consolidating costlier debt or funding value-adding work can clear the bar; lifestyle spending against thirty-year collateral rarely does. Because a cash-out enlarges the loan and resets your equity, it also raises your risk if values dip. If tapping equity is the whole point of the exercise, the dedicated cash-out refinance and home equity calculators model the proceeds, the loan-to-value limit and the second-lien alternatives in more detail than a rate comparison can.
Clearing the credit, income, and appraisal hurdles
The saving this tool computes assumes you actually qualify for the new rate, and that is not automatic. A refinance is a new loan application, so the lender re-checks the three things that decide whether you get the quoted rate at all: your credit, your income, and the value of the home. Your credit score sets the rate tier you are offered — the 4.5% in the default is a strong-credit rate, and a weaker profile may be quoted a higher number that shrinks the saving or erases it. Lenders also weigh your debt-to-income ratio, comparing your total monthly obligations against your income to confirm you can carry the new payment; if your income has fallen or your other debts have grown since the original loan, you may not qualify even though the home and balance are unchanged — the debt-to-income calculator shows where you stand before you apply. The appraisal is the third gate and often the most surprising. The lender orders a fresh valuation, and your equity — the gap between the home's value and the balance — drives both eligibility and price. A high loan-to-value ratio can disqualify you, trigger mortgage insurance, or push you into a worse tier, while strong equity unlocks the best pricing. Fees also matter: folding them into a true APR with the APR calculator lets you compare offers on one honest number rather than the nominal rate alone. None of this changes the math once you are approved, but it explains why the rate you are finally offered can differ from the one you assumed — so confirm your credit, tidy your debt-to-income picture, and get a realistic sense of your home's value first, then run the firm quote through this tool.
Frequently asked questions
Should I keep the same term, or take a longer or shorter one?
That choice is the heart of a refinance. Keeping the years equal — 25 against 25 in the default — isolates the rate, so the whole 2,654 monthly saving and 746,220 lifetime saving come from the lower rate alone. Stretching to a longer term lowers the payment further but spreads interest over more years; shortening it raises the payment but can save a fortune in interest. The term-options table prices 10 through 30 years side by side, and the verdict on each tells you whether it wins on cash flow, on lifetime cost, or on both, so you can pick the term that matches your goal rather than the one with the smallest payment.
What does the break-even month tell me?
It is the cash closing costs divided by the monthly saving — 50,000 ÷ 2,654 ≈ 19 months in the default. Until that month the refinance has cost more than it has saved; after it, every lower payment is money you keep. Because of that, your expected holding period is usually the deciding number: a big monthly saving paired with steep fees can still lose money if you sell or refinance again before break-even, while a modest saving with low fees pays off quickly.
Is the monthly saving the same as my real saving?
No. The 2,654 monthly figure ignores both the 50,000 you spend to get it and the chance you won't keep the loan for its full life. Net lifetime saving folds both in: on the rate-and-term debt the new loan saves about 796,220 of interest, and after the 50,000 of costs that leaves 746,220. Move sooner and you capture only part of it, which is why a large monthly saving can still net little.
How does taking cash out change the result?
Cash-out adds to the new loan, so the payment rises and may even exceed today's — borrow 500,000 and it climbs to about 19,454. The tool keeps the two motives separate: it still reports the rate-and-term saving (746,220) untouched, and it prices the cash-out on its own — about 2,779 a month and 333,749 of lifetime interest, so 500,000 in hand costs about 833,749 over the life. Judge the cash by whether its use is worth that cost, not by the headline rate. If tapping equity is the whole point, the dedicated cash-out refinance and home equity calculators model it directly.
Is a no-closing-cost refinance better?
It depends entirely on how long you'll stay. The no-cost comparison prices a higher rate with zero upfront cost against your quoted rate with real fees: paying the 50,000 buys a bigger 2,654 monthly saving, while a no-cost 5% rate saves only about 1,791 a month but costs nothing today. The paid deal overtakes the no-cost one after about 58 months, so paying the fees wins for a long hold and the no-cost route wins if you expect to move or refinance again first.
Does a lower rate always mean a lower payment?
Only when nothing else changes. Drop the rate with the same balance and term and the payment must fall — 19,329 to 16,675 here. But add cash-out or shorten the term and the payment can rise even at a lower rate, because the loan is now larger or paid off faster. And a payment that falls partly because the term was stretched isn't a pure rate saving; the net lifetime figure and the term-options table keep that distinction honest.
Will I actually qualify for the new rate?
A refinance is a new loan application, so the rate you finally get depends on your credit, your debt-to-income ratio and a fresh appraisal of the home — the same checks behind the APR and debt-to-income calculators. A weaker credit profile, higher debts, or a low appraisal can raise the rate or shrink your equity below the level the best pricing needs. Treat the saving here as what a strong, approved borrower would get, and confirm your own quote before committing.