Refinance Calculator

About this calculator

A free refinance calculator that compares your current mortgage against a new loan three ways: monthly payment, break-even on closing costs, and lifetime interest. Dropping a $300,000 balance with 27 years left from 7.5% to a new 30-year loan at 6.25% cuts the payment from $2,162.20 to $1,847.15, breaks even on $6,000 of closing costs in month 20, and — even after resetting to 30 years — comes out $29,578.71 ahead on lifetime cost. A cash-out view prices taking equity out at closing. The comparison ignores tax effects and escrow changes and holds both rates fixed — an estimate for deciding whether an offer is worth pursuing, not a rate quote or financial advice.

Break-even is the first number that matters

A refinance trades upfront closing costs for a smaller payment, so the question is how long you must keep the loan for the trade to pay off. The calculator divides closing costs by the monthly saving: $6,000 of costs against a $315.05 monthly saving breaks even in month 20. Stay past that month and the refinance is winning; sell or refinance again before it and you paid for savings you never collected.

The rule of thumb that follows: if your break-even is longer than the time you realistically expect to keep the home — or the loan — the refinance has to justify itself some other way, like getting out of an adjustable rate before it resets.

The term-reset trap, measured

Most refinances reset the clock to a fresh 30 years, and a smaller payment over more months can quietly cost more in total. The calculator therefore reports lifetime cost, not just the payment: in the example, staying put means $400,553.29 of remaining interest, while the new 30-year loan carries $364,974.58 plus $6,000 of closing costs — $29,578.71 ahead despite adding three years of payments, because the rate drop is large enough to overcome the reset.

Shrink the rate drop and that win evaporates: small rate improvements with a full term reset routinely show a monthly saving and a lifetime loss at the same time. When the two indicators disagree, the lifetime number is the honest one — or refinance into a shorter term so they agree again.

How to read a cash-out refinance

A cash-out refinance replaces your loan with a bigger one and hands you the difference at closing. The calculator adds your cash-out amount to the new balance and prices the result. The pattern it usually reveals: taking $40,000 out of the example loan at 6.5% leaves the payment almost unchanged ($2,149.03 vs $2,162.20), which feels free — but lifetime interest rises by $40,097.97 over staying put, because you're financing the $40,000 over decades at mortgage rates.

That doesn't make cash-out wrong — it's often the cheapest large sum a homeowner can raise — but the cost lives in the lifetime number, not the payment. Compare it against a HELOC before committing, especially if your existing first-mortgage rate is lower than today's market.

What's outside the model

The comparison holds both rates fixed, treats closing costs as paid in cash at closing, and ignores points, escrow changes, mortgage insurance, and the tax treatment of mortgage interest. Rolled-in closing costs make the real arithmetic slightly worse than shown. Treat the output as a screening estimate, then verify against a real Loan Estimate from a lender.

By variant

• Refinance Break-Even
• Cash-Out Refinance

Questions

When is refinancing worth it?

As a screen, when the break-even month arrives well before you'd plausibly sell or refinance again, and the lifetime cost comes out ahead. The 6.25%-for-7.5% example breaks even in 20 months and saves $29,578.71 over the life of the loan.

How is the break-even point calculated?

Closing costs divided by the monthly payment saving, rounded up to a whole month. $6,000 ÷ $315.05 → month 20. If the new payment isn't lower, there is no break-even.

Does refinancing restart my 30 years?

Only if you choose a new 30-year term — and the calculator measures exactly what that reset costs by comparing the interest left on your current loan against the new loan's full-term interest plus closing costs.

Is a cash-out refinance cheaper than a HELOC?

Sometimes — but a cash-out reprices your entire balance at today's rate, while a HELOC adds a second loan and leaves the first untouched. If your existing rate is low, repricing the whole balance to extract equity is often the expensive route.

Is this a rate quote?

No. It compares the loan terms you type in, holding rates fixed and ignoring taxes and escrow. Real offers come as a Loan Estimate from a lender and depend on credit, equity, and program.