Mortgage Refinance Calculator

Break-even = closing costs ÷ monthly savings. If refinancing costs $6,000 and saves you $200/month, your break-even is 30 months. Stay in the home longer than that and you come out ahead; sell or refinance again sooner and you've handed cash to the lender for nothing.

Layer in your realistic time horizon. The average US homeowner moves every 8–13 years, but if you've already been in the home for 10 years and the kids are about to leave for college, your remaining horizon might be 3–4 years. A 30-month break-even on a 36-month horizon is a marginal win; the same refi on a 10-year horizon is a clear yes.

Rolling closing costs into the new loan means zero cash today but you finance those fees at the new rate for 15 or 30 years. On a 30-year loan at 6%, $6,000 of rolled-in costs becomes about $13,000 in total cash paid (principal + interest) by the end of the term.

Paying upfront is cheaper long-term but requires the cash now. The rule of thumb: if you have the cash and plan to keep the loan more than ~5 years, pay upfront. If cash is tight or you might refinance again soon, roll it in and use the savings elsewhere. The break-even point itself is similar either way — what changes is your total lifetime cost.

The biggest hidden trap in refinancing is resetting amortization. If you're 10 years into a 30-year mortgage and refinance into a fresh 30-year loan, you've extended your total payoff to 40 years. Even at a lower rate, the extra decade of interest can wipe out the monthly savings.

Two ways to avoid the trap: refinance into a shorter term (e.g., 15- or 20-year) so you stay on track for the original payoff date, or take the 30-year for the cash-flow flexibility but make extra principal payments equal to your old payment. Either approach captures the rate savings without giving back the years of equity you've already built.

The '0.75–1.0% lower rate' rule of thumb still applies, but it's secondary to the break-even-vs-horizon comparison. A 0.5% drop on a $500K loan with low closing costs and a long horizon can beat a 1.0% drop on a $200K loan with high fees and a short horizon. Always run the actual numbers.

Say you have a $300,000 balance, 27 years left, at 7.25% — your current payment is about $2,066/month (principal & interest only). You're offered a new 30-year loan at 5.75% with $6,000 in closing costs rolled in.

The new loan principal becomes $306,000. At 5.75% over 30 years, your new payment drops to roughly $1,786/month — a monthly savings of about $280. Divide $6,000 of closing costs by $280 in monthly savings and your break-even is ~21 months. Stay in the home longer than ~2 years and you come out ahead.

Lifetime savings look bigger but read them carefully: you'll pay ~$643K total on the new 30-year vs. ~$669K remaining on the old 27-year — a ~$26K lifetime win. The catch: you added 3 years of payments. Plug your own numbers into the calculator above to see how the break-even and lifetime-savings figures shift with your loan size and closing costs.