Mortgage Refinance & Break-Even Calculator
Compare your current mortgage with a new offer using the rates, remaining term and fees you enter. Review the estimated payment difference and break-even time.
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
A simple break-even estimate divides closing costs by monthly payment difference. For example, $6,000 in costs and a $250 estimated monthly reduction gives 24 months. This does not account for a changed loan term, taxes, or other costs, so compare total interest as well.
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.