Mortgage Refinance & Break-Even Calculator
Compare your existing mortgage against a new refinance quote. Calculate monthly cash-flow relief, closing cost recovery horizon, and true lifetime interest savings.
Methodology and AI Summary
Global Finance Calculator computes accurate financial projections based on updated localized rules. The calculator does not store data on our servers and processes all parameters locally for strict privacy.
Save $311.11/mo
New payment: $1,867.43 vs Current: $2,178.54
$2,929.68
Net savings after costs$4,500.00
Fees & points paid$359,706.69
If keeping current loan$352,277.79
Over new loan termCalculation is instantly saved in this shareable URL.
🗄️ Saved Comparison Scenarios (Side-by-Side)
Cumulative Cost Comparison
How to Determine if Refinancing Makes Financial Sense
Refinancing involves replacing your existing mortgage note with a new contract featuring different interest rates, loan structures, and amortization horizons. While lower interest rates reduce monthly payments, refinancing requires paying title insurance, appraisal fees, and loan origination points. Evaluating the true value requires examining both the break-even period and lifetime interest totals.
1. The Break-Even Formula
The Break-Even Period measures the exact number of months required for monthly savings to exceed all transaction costs: Total Closing Costs ÷ Monthly Savings = Break-Even Months. If your closing costs equal $6,000 and your payment drops by $250/mo, you achieve break-even in 24 months. If you move or sell before month 24, refinancing produces a net financial loss.
2. Beware the "Term Reset Trap"
Borrowers who have paid 10 years on a 30-year mortgage often refinance the remaining 20-year balance back into a fresh 30-year loan to achieve lower payments. While this lowers the monthly payment, it stretches interest over another decade, frequently resulting in thousands of dollars more in total interest paid across your lifetime.
3. Rolling Costs into Balance
Financing closing costs into the loan avoids paying out of pocket on closing day, but it increases your principal debt. You will pay compound interest on those closing fees for the entire duration of the loan. Paying closing fees in cash yields the highest net return on investment.
Calculation Methodology & Proof
Refinance savings
Compare the remaining amortization of the current loan with a new loan after costs.
- Build the remaining schedule on the current balance, rate, and term.
- New principal = balance + cash-out (+ costs if rolled in).
- Difference in monthly P&I is the cash-flow change; costs delay the benefit.
- A lower payment from a longer term can still lose on lifetime interest.
Important Caveats & Planning Assumptions
- Ignores tax effects of interest and points.
- Does not model prepayment penalties.
Frequently Asked Questions
Expert answers to common questions
When is refinancing worth it?
When lifetime savings stay positive after costs and you will keep the loan past the break-even month. Dropping payment by stretching the term can look good monthly and still cost more overall.
Should I roll closing costs into the loan?
It preserves cash but you pay interest on the fees. Compare both options; the cash-out / roll-in toggle does that.
What about cash-out?
Cash-out increases the new principal. The 'savings' then mix cheaper rate with a larger balance — read lifetime cost, not just the payment.