Compare your current loan to a new rate, see the monthly savings and how long until refinancing pays for itself.
A mortgage refinance calculator compares your current home loan to a new one, so you can see your monthly savings and how long it takes to break even on the closing costs. It's the fastest way to decide whether refinancing is worth it at today's rates.
Refinancing replaces your current mortgage with a new one, ideally at a lower rate. The catch is closing costs, which can run several thousand dollars. The number that decides it is the break-even point, closing costs divided by your monthly savings. If you'll stay in the home past that point, refinancing usually pays off; if you might move sooner, it may not. A rate drop of roughly 0.5-1% is often worth investigating, but the break-even math is what actually settles it.
Refinancing into a fresh 30-year loan lowers the payment but can reset the clock, stretching your payoff and sometimes raising total interest even at a lower rate. Compare the lifetime-interest figures above, not just the monthly payment. Refinancing to a shorter term, or keeping your payment the same and letting the extra go to principal, captures the rate savings without extending the loan.
Refinancing replaces your current loan with a new one, usually to secure a lower rate, change the term, or tap equity. It tends to make sense when rates have fallen meaningfully since you borrowed, when your credit has improved enough to qualify for a better rate, or when you want to switch from an adjustable to a fixed rate for certainty. Because refinancing carries closing costs, the key question is whether you will keep the new loan long enough for the monthly savings to repay those costs.
A rate-and-term refinance changes your rate, your term, or both without increasing the balance, and is the classic way to save on interest. A cash-out refinance borrows more than you owe and gives you the difference in cash, useful for consolidating higher-rate debt or funding a large expense, but it raises your balance and payment and puts more of your home on the line. Choose based on your goal: lowering cost points to rate-and-term, while accessing equity points to cash-out, weighed carefully against the added debt.
Refinancing is not free; closing costs typically run 2% to 5% of the loan and cover appraisal, title, and lender fees. The break-even point, closing costs divided by your monthly savings, tells you how many months it takes to come out ahead. If you will sell or refinance again before then, the refinance loses money; if you will keep the loan well past break-even, it pays off. Always weigh the upfront cost against the monthly benefit rather than focusing on the new rate alone.
The rate you can refinance into depends heavily on your current credit score, equity, and debt-to-income ratio, just like the original loan. If your score has risen since you first borrowed, you may qualify for a noticeably better rate; if it has fallen, refinancing may not help. Checking your credit and getting quotes from several lenders before applying ensures the new rate is actually an improvement worth the closing costs.
A common pitfall is refinancing a loan you are years into back to a fresh 30-year term. The payment drops, but stretching the remaining balance over more years can raise the total interest even at a lower rate. To genuinely save, refinance into a term no longer than what you have left, or keep making your old higher payment on the new lower-rate loan. Comparing lifetime interest, not just the monthly payment, reveals whether a refinance truly helps.
Refinancing is not always the best tool. If your goal is a lower payment but rates have not fallen, simply making extra principal payments shortens the loan and cuts interest without any closing costs. If you need cash, a home equity line of credit or loan can tap equity while leaving your low-rate first mortgage untouched, which is often smarter than a cash-out refinance when your current rate is good. For an adjustable-rate mortgage nearing its reset, some lenders offer a loan modification rather than a full refinance. And if you are close to paying off a loan, the closing costs of refinancing rarely pay off in the short time remaining. Weighing these alternatives against a refinance, and running the break-even math, ensures you pick the option that genuinely costs the least for your situation rather than defaulting to a refinance out of habit.
It usually is if you'll stay in the home past the break-even point, closing costs divided by monthly savings. This calculator shows that break-even in months.
The number of months of savings it takes to recover the closing costs. If you'll keep the home longer than that, refinancing tends to pay off.
A shorter term raises the payment but can save a lot of interest. Compare the lifetime-interest figures for each option above.
Closing costs usually run 2% to 5% of the loan amount, covering appraisal, title, and lender fees. Divide those costs by your monthly savings to find the break-even point, the month you start coming out ahead.
Applying triggers a hard inquiry that dips your score slightly and temporarily. Rate-shopping several lenders within a short window usually counts as a single inquiry. The long-term effect is minor compared with the potential interest savings.
See the exact formula and a worked example on our methodology page.