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Mortgage & Loans
Mortgage Refinance Calculator — New Payment, Savings & Break-Even
Compare your current mortgage to a new rate and term — and find out when the closing costs pay for themselves
Refinancing replaces your current home loan with a new one — usually to grab a lower rate or shorten the term. The pitch is always a lower payment, but the real question this calculator answers isn't "what's my new payment?" It's how many months until the closing costs pay for themselves, and how much you actually save each month after that. That break-even month is the number lenders gloss over, and it's the one that decides whether a refi is a win or a wash.
We still need your new payment as a starting point, so we run the standard amortization formula once:
M = P × [ r(1 + r)ⁿ ] ÷ [ (1 + r)ⁿ − 1 ]
where P is the new balance, r is the monthly rate (annual ÷ 12), and n is the number of payments (term in years × 12). If you want to dig into how that monthly figure is built from scratch, that's the job of our Mortgage Payment Calculator — here it's just the input to the part that matters. From your new payment, the three numbers that own this page fall out:
• Monthly savings = current payment − new payment • Break-even (months) = closing costs ÷ monthly savings • Lifetime interest difference, framed around that break-even
Worked example. Say you owe $300,000 at 7.25% with a current payment of $2,150/month, and you refinance into a fresh 30-year loan at 6.0% with $6,000 in closing costs. The new payment works out to $1,798.65, so your monthly savings are about $351.35. Divide the $6,000 in closing costs by that $351.35 and you break even at roughly 17 months — about a year and a half. Stay in the home past month 17 and every payment after that is pure savings; sell or move before then and the closing costs never earned their keep.
That's also how to read the lifetime-interest line. Resetting a loan you've already paid down for several years back to a new 30-year term can drop the payment yet stretch your payoff well past break-even, so the "savings" arrive only after you've re-paid years of interest. The break-even month tells you when you start winning; the lifetime-interest figure tells you whether the win is big enough to justify restarting the clock. If your goal is rolling high-interest debt into the mortgage rather than just lowering the rate, compare the math against our Debt Consolidation Calculator before you decide.
Quick rule of thumb: a refi usually pays when you can stay past the break-even month and the lifetime-interest difference stays in your favor. Plug in your numbers below and watch both at once.
This calculator provides informational estimates only and is not financial advice. Your actual closing costs, rate, and savings depend on your lender, credit, and loan terms — confirm the numbers with a licensed mortgage professional before refinancing.
Calculator
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📰 Formula
• New payment: M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ] • r = new annual rate / 100 / 12 (monthly rate) • n = new term in years × 12 (number of payments) • Monthly savings = current payment − new payment • Break-even (months) = closing costs / monthly savings • Lifetime interest diff = old remaining interest − new total interest
📰 Formula
• New payment: M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ] • r = new annual rate / 100 / 12 (monthly rate) • n = new term in years × 12 (number of payments) • Monthly savings = current payment − new payment • Break-even (months) = closing costs / monthly savings • Lifetime interest diff = old remaining interest − new total interest
🧪 Worked examples
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Example 2
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Example 3
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Example 4
⚠️ Common mistakes
- Judging the refi by the lower monthly payment alone, ignoring lifetime interest.
- Forgetting closing costs (2%–5% of the balance) when sizing the savings.
- Comparing your current payment (which may include taxes and insurance) to a principal-and-interest-only new payment.
- Dropping the yearly rate into the payment formula as-is — a 6.0% rate has to become 0.005 monthly (6.0 ÷ 100 ÷ 12) first.
💡 Tips
- Enter your current principal-and-interest payment only — leave out escrow (taxes/insurance) so you compare apples to apples.
- Aim to stay in the home past the break-even month, or the closing costs eat your savings.
- Shortening the term (e.g., 30→15 years) may raise the payment but can save a fortune in lifetime interest.
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❓ Frequently asked questions
How much will refinancing actually save me each month?
Monthly savings = your current principal-and-interest payment − your new payment. Refinancing a $300,000 balance from 7.25% to 6.0% on a fresh 30-year term drops the payment from $2,150 to about $1,798.65 — a saving of roughly $351 a month. That monthly figure is what your break-even is measured against.
What is the break-even point on a refinance, and how do I find it?
Break-even is the month your accumulated savings finally cover the closing costs: break-even = closing costs ÷ monthly savings. With $6,000 in costs and $351 saved per month, that's $6,000 ÷ $351 ≈ 17 months. Every payment after month 17 is money you keep; anything before it, the refi hasn't paid for itself yet.
Is it worth refinancing my mortgage?
It comes down to the break-even month versus how long you'll stay. If you break even at 17 months and plan to keep the home for years, the refi pays. If you might sell or refinance again before break-even, the closing costs outrun your savings and it doesn't — no matter how good the new rate looks on paper.
How much does it cost to refinance a mortgage?
Closing costs typically run 2% to 5% of the loan balance — on a $300,000 refinance that's roughly $6,000 to $15,000 for appraisal, origination, title, and recording fees. Because this number is the numerator of your break-even, get a real lender estimate rather than guessing: a $3,000 swing in costs can move your break-even by many months.
Does a lower monthly payment mean I'm saving money?
Not by itself. The monthly drop only becomes real savings after you've passed the break-even month, and even then a fresh 30-year term can add years of interest. Read the break-even month and the lifetime-interest difference together — the payment alone tells you almost nothing about whether you're ahead.
What rate drop makes refinancing worth it?
A common rule of thumb is a drop of at least 0.5% to 1%. Smaller drops can still pay off on large balances, but the closing costs have to clear within the time you'll keep the home.
Should I refinance to a shorter term?
Going from a 30-year to a 15-year loan usually raises the monthly payment but slashes total interest, since you pay off the principal faster at a typically lower rate.
How long should I plan to stay in my home to refinance?
At least past the break-even month. In the example above you break even at about 17 months, so selling or moving inside that window means the $6,000 in closing costs outrun your $351-a-month savings and the refi ends up costing you. Match your break-even against your realistic time-in-home before committing.
Does refinancing reset the clock on my loan?
Yes — a refinance starts a brand-new loan with a new term. If you're 10 years into a 30-year mortgage and refi into another 30-year, you've stretched your payoff out to 40 years total unless you choose a shorter term.