Refinance Calculator

Compare your current loan to a refinance offer. Enter your balance, current and new interest rates, loan terms, and closing costs to see the new monthly payment, how much you'd save each month, how many months it takes to break even on closing costs, and the net lifetime savings.

Quick Facts

Formula
M = P x r(1+r)^n / [(1+r)^n - 1]
Standard amortization formula, applied once at the current rate/term and once at the new rate/term.
Break-even
Closing costs / monthly savings
Months needed for accumulated payment savings to cover what you paid to refinance.

Your Results

Calculated
New monthly payment
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Principal & interest at the new rate/term
Monthly savings
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Current payment minus new payment
Break-even point
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Months to recoup closing costs
Net lifetime savings
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Interest saved minus closing costs

Ready

Enter your current loan details and a refinance offer, then press Calculate.

How the Refinance Calculator works

Refinancing replaces your existing loan with a new one — usually to get a lower interest rate, change the loan term, or both. This calculator compares your current loan's monthly payment against a new loan on the same balance, then tells you how long it takes for the monthly savings to pay back what the refinance costs you upfront.

The formula

Both the current and new monthly payments use the standard loan amortization formula:

M = P × [r(1 + r)n] / [(1 + r)n − 1]

where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments (term in years × 12). The calculator runs this once using your current rate and remaining term to estimate the current payment, and again using the new rate and new term — applied to the same principal balance — to estimate the refinanced payment.

Break-even point

The break-even point is the number of months it takes for accumulated monthly savings to equal your closing costs:

Break-even (months) = Closing costs / (Current payment − New payment)

If you plan to keep the loan (or the property) longer than the break-even period, the refinance saves money overall. If you expect to sell or refinance again before then, the upfront cost may not be worth it even if the new rate is lower.

Worked example

Take a $300,000 balance with 25 years remaining at 6.5%, refinanced into a new 30-year loan at 5.5% with $4,000 in closing costs. The current payment is about $2,026/month; the new payment is about $1,703/month — a savings of roughly $322/month. Dividing $4,000 by $322 gives a break-even point of about 12.4 months. Note that the new loan also resets the clock to 30 years, so total interest paid over the life of each loan depends on both the rate and the term length, not the rate alone.

What this calculator assumes

  • Same principal: the new loan amount equals your current balance. Closing costs are assumed to be paid out of pocket, not rolled into the new loan.
  • No cash-out: this does not model cash-out refinancing, where you borrow more than your current balance.
  • Fixed-rate amortization: both loans are treated as fixed-rate, fully amortizing loans with equal monthly payments — it does not model adjustable rates, interest-only periods, or balloon payments.
  • Principal & interest only: payments exclude taxes, insurance, and PMI, which may change separately when you refinance.

Next steps

  • Get an actual rate quote and a closing-cost estimate (Loan Estimate) from a lender rather than relying only on assumed figures.
  • Compare the break-even period to how long you actually expect to keep the loan.
  • Re-run the numbers if the quoted rate, term, or closing costs change during underwriting.

Frequently Asked Questions

How is the new monthly payment calculated?
The calculator uses the standard loan amortization formula M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the number of monthly payments (term in years times 12). It applies this formula once with your current rate and remaining term to estimate your current payment, and again with the new rate and new term to estimate the refinanced payment, assuming the same principal balance carries over.
How is the break-even point calculated?
Break-even in months equals total closing costs divided by the monthly savings (current payment minus new payment). It is the point at which the accumulated monthly savings equal what you paid in closing costs to refinance. If the new payment is not lower than the current one, there is no break-even point because the refinance never recovers its upfront cost through payment savings alone.
Does this include rolling closing costs into the loan or cash-out refinancing?
No. This calculator assumes the new loan principal equals your current balance and that closing costs are paid separately out of pocket, not added to the loan. It also does not model cash-out refinancing (borrowing more than the current balance). Rolling costs into the loan or taking cash out would change the principal and therefore the payment and break-even figures.
Why compare total interest over different remaining terms?
Your current loan has a remaining term (how many years are left) while a refinance typically resets the clock to a new term, often 15 or 30 years. Comparing total interest paid over each loan's own remaining schedule shows the real lifetime cost difference, but remember that a longer new term can lower the monthly payment while increasing total interest paid, even at a lower rate.

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