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№ 003 · Mortgage cluster

Refinance Calculator

A refinance trades closing costs today for a lower payment tomorrow. This calculator finds the exact month that trade turns profitable — your break-even point — and shows whether the new loan really saves interest over its life or just spreads it out.

Break-even · savings · lifetime interest

Just shopping for a payment? Start with the Mortgage Calculator. Happy with your rate but want a lower payment? A Mortgage Recast re-amortizes a lump sum — no new loan.

Your current loan01
$
%
The new loan02
%
$
Break-even time

1y 6m

$335.46/mo lower paymentSaves $71,833.36 interest over the life
Keep current loan
Monthly P&I$2,038.83
$385,045.48 interest left
over 336 more payments
RefinanceLower
Monthly P&I$1,703.37
$313,212.12 interest total
over 360 payments + $6,000.00 costs
Monthly savings$335.46
Closing costs$6,000.00
Lifetime interest−$71,833.36
Cumulative cost over time — keep current versus refinance
  • Keep current
  • Refinance
Cumulative cost over time — keep current versus refinance
StartKeep current $0.00, Refinance $6,000.00
Year 0.4Keep current $10,194.15, Refinance $14,516.85
Year 0.8Keep current $20,388.30, Refinance $23,033.70
Year 1.3Keep current $30,582.45, Refinance $31,550.55
Year 1.7Keep current $40,776.60, Refinance $40,067.40
Year 2.1Keep current $50,970.75, Refinance $48,584.25
Year 2.5Keep current $61,164.90, Refinance $57,101.10
Year 2.9Keep current $71,359.05, Refinance $65,617.95
Year 3.3Keep current $81,553.20, Refinance $74,134.80
Year 3.8Keep current $91,747.35, Refinance $82,651.65
Cumulative cost · by year
What you’ll have spent on each path at the end of each year — including the upfront closing costs on the refinance — and how far ahead the refinance puts you.
YearKeep currentRefinanceYou’re ahead by
1$24,465.96$26,440.44−$1,974.48
2$48,931.92$46,880.88$2,051.04
3$73,397.88$67,321.32$6,076.56
How it works · methodology

The math, in the open.

payment P&I = L · [ r(1+r)^n ] / [ (1+r)^n − 1 ]
monthly savings = current P&I − new P&I
break-even months = ⌈ closing costs ÷ monthly savings ⌉
lifetime interest change = new total interest − current remaining interest
L is the balance, r the monthly rate (APR ÷ 12), and n the number of payments. The break-even rounds up to a whole month; if the new payment isn't lower there are no savings to recoup, so the refinance never breaks even.
L
Current loan balance (refinanced amount)
r
Monthly interest rate (APR ÷ 12)
n
Number of payments (months) on each loan
closing costs
Out-of-pocket cost to refinance

Assumptions & limits

  • Closing costs are paid out of pocket, not rolled into the new balance; the new payment is figured on the current balance.
  • Both loans are fixed-rate and fully amortizing; the current payment is the scheduled P&I on the remaining balance.
  • Break-even compares the upfront cost against the monthly P&I savings only — it ignores taxes, insurance, and PMI, which a refinance usually leaves unchanged.
  • Lifetime interest compares the new loan’s full-term interest against the interest still owed on the current loan. An estimate, not a loan offer.

Sources

By the MintNumber Editorial Team·Reviewed
Frequently asked

Questions about refinancing

What does the refinance break-even point actually mean?
It is the number of months it takes for your monthly savings to add up to the closing costs you paid up front. Before that month you are still in the hole on the deal; after it, every payment is pure savings. The rule of thumb: refinance only if you expect to keep the home well past the break-even.
How are closing costs handled here?
This calculator assumes you pay closing costs out of pocket, so they sit on top of the refinanced balance and the new payment is figured on the original balance alone. If instead you roll the costs into the loan, your new balance — and payment — would be a little higher; treat the result as the out-of-pocket case.
Why can a lower rate still cost me more interest?
Because resetting the clock matters as much as the rate. Refinancing a loan with 22 years left into a fresh 30-year term stretches the payments out, and those extra years of interest can outweigh the lower rate. The lifetime-interest figure shows the net effect — it can be a saving or a cost depending on the new term you choose.
Does a lower monthly payment always mean a better deal?
No. A smaller payment is easier on the monthly budget, but if it comes from stretching the term you may pay more interest overall. Look at both numbers together: the break-even tells you when the refinance pays for itself, and the lifetime-interest delta tells you whether you come out ahead over the whole loan.
Should I refinance to lower my payment or to pay off faster?
That is the real choice. Refinancing into a longer term lowers the payment and frees up cash flow; refinancing into a shorter term at a lower rate can save a large amount of interest but usually keeps the payment similar. Decide which goal matters more, then test both new terms above and compare the break-even and lifetime interest.