Mortgage Refinance
Calculate how much you could save by refinancing your mortgage to a lower interest rate. Factor in closing costs to see your true break-even point.
Current Mortgage
New Loan Terms
Break-Even Analysis
Break-Even Point
13 months
Current Interest
$330,000
New Total Interest
$313,212
Beyond the Numbers
Understanding the structural impact of refinancing on your long-term wealth.
01The Logic of the Break-Even Point
Refinancing is fundamentally an investment. You are paying an upfront cost (the closing fees) to secure a lower recurring cost (the monthly payment). The most critical metric provided by this calculator is the break-even point.
If your break-even point is 36 months, but you plan to sell the property or move within 2 years, you will actually lose money by refinancing, regardless of how much lower the new interest rate appears to be.
02Hidden Impacts of Term Resets
A common pitfall is refinancing from a 30-year loan into a fresh 30-year loan after you have already paid into your current mortgage for several years. While your monthly payment will drop significantly, you might end up paying more in total interest over the life of the loan.
Consider refinancing into a 15-year or 20-year term to maintain your amortization progress while still capturing lower market rates. Our "Lifetime Savings" metric helps you see this trade-off clearly.
03Closing Costs and Out-of-Pocket Reality
Many lenders offer "no-closing-cost" refinances. In reality, these costs are usually rolled into the loan balance or traded for a slightly higher interest rate. Always verify the actual principal balance of the new loan compared to your current one to ensure you aren't eroding your home equity unnecessarily.
Frequently Asked Questions
When does refinancing a mortgage make sense?
Refinancing typically makes sense when you can lower your interest rate by at least 0.5-1%, plan to stay in the home past the break-even point (closing costs ÷ monthly savings), and have good enough credit to qualify for a better rate.
How much do closing costs typically cost when refinancing?
Closing costs for a refinance typically run 2-5% of the loan amount, or roughly $3,000-$7,000 on a $200,000 loan. This includes appraisal, origination fees, title insurance, and government recording fees.
What is the break-even point for a mortgage refinance?
The break-even point is how many months it takes for your monthly savings to cover the closing costs. Divide your total closing costs by your monthly savings. For example, $5,000 in closing costs ÷ $200/month savings = 25 months to break even.
Does refinancing reset my 30-year mortgage?
If you refinance into a new 30-year loan, yes — the clock resets. However, you can refinance into a shorter term (15 or 20 years) to avoid this. Use this calculator to compare total interest paid under each scenario.