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Refinance Calculator

Compare your existing loan against a refinanced mortgage side-by-side. Calculate monthly savings, true APR, upfront points, closing fees, and break-even recovery timeline.

Current Loan

$
$
%

New Loan

years
%
%

Prepaying interest upfront to lower the interest rate. 1 point equals 1% of the new loan amount.

$

Sum of all appraisal, origination, title, application, and underwriting fees paid upfront.

$

Additional cash you wish to withdraw as equity (enter a negative number if contributing extra principal cash).

The APR for the new loan is 6.329%, which is 0.671% lower than the 7.000% interest rate of the current loan. Refinancing would be financially less expensive.

New Monthly Payment $1,791.08 -$8.92/mo
Length 20 yrs 45 mos faster
Lifetime Savings $76,641.36 over total loan
Time to Recover Cost/Points 30 mos ~2.5 yrs
$8.92/month savings in monthly pay
45 months faster the loan will be paid off
$76,641.36 lifetime savings for the new loan
$6,500.00 total upfront closing cost ($5,000.00 points + $1,500.00 closing fees)
Break even point: 30 months

Loan Comparison Table

Item Current Loan (remaining) New Loan Difference
Principal / Loan Amount $250,000.00 $250,000.00 $0.00
Monthly Payment $1,800.00 $1,791.08 -$8.92
Length 23 yrs 9 mos (285 mos) 20 yrs (240 mos) -45 mos
Interest Rate / APR 7.000% 6.000% (APR 6.329%) -1.000%
Total Monthly Payments $513,000.00 $429,858.64 -$76,641.36
Total Interest Paid $263,000.00 $179,858.64 -$83,141.36
Cost + Points (upfront) $0.00 $6,500.00 +$6,500.00
Time to Recover Cost/Points — 30 months —

Annual Amortization Comparison Schedule Side-by-side progression

Year Cur. Balance Cur. Interest New Balance New Interest Cumul. Savings
Year 1 $245,766.00 $17,366.00 $243,326.00 $14,818.00 -$6,393.00
Year 2 $241,226.00 $17,060.00 $236,239.00 $14,407.00 -$6,286.00
Year 3 $236,357.00 $16,732.00 $228,716.00 $13,970.00 -$6,179.00
Year 4 $231,137.00 $16,380.00 $220,729.00 $13,506.00 -$6,072.00
Year 5 $225,539.00 $16,002.00 $212,249.00 $13,013.00 -$5,965.00
Year 6 $219,537.00 $15,598.00 $203,246.00 $12,490.00 -$5,858.00
Year 7 $213,100.00 $15,164.00 $193,688.00 $11,935.00 -$5,751.00
Year 8 $206,199.00 $14,698.00 $183,540.00 $11,345.00 -$5,643.00
Year 9 $198,798.00 $14,199.00 $172,767.00 $10,719.00 -$5,536.00
Year 10 $190,863.00 $13,664.00 $161,329.00 $10,055.00 -$5,429.00
Year 11 $182,354.00 $13,091.00 $149,185.00 $9,349.00 -$5,322.00
Year 12 $173,229.00 $12,476.00 $136,292.00 $8,600.00 -$5,215.00
Year 13 $163,445.00 $11,816.00 $122,605.00 $7,805.00 -$5,108.00
Year 14 $152,954.00 $11,109.00 $108,073.00 $6,961.00 -$5,001.00
Year 15 $141,705.00 $10,350.00 $92,644.00 $6,065.00 -$4,894.00
Year 16 $129,642.00 $9,537.00 $76,265.00 $5,113.00 -$4,787.00
Year 17 $116,707.00 $8,665.00 $58,875.00 $4,103.00 -$4,680.00
Year 18 $102,837.00 $7,730.00 $40,412.00 $3,030.00 -$4,573.00
Year 19 $87,964.00 $6,727.00 $20,810.00 $1,891.00 -$4,466.00
Year 20 $72,017.00 $5,652.00 $0.00 $683.00 -$4,359.00
Year 21 $54,916.00 $4,499.00 $0.00 $0.00 $17,241.00
Year 22 $36,579.00 $3,263.00 $0.00 $0.00 $38,841.00
Year 23 $16,917.00 $1,938.00 $0.00 $0.00 $60,441.00
Year 24 $1,243.00 $526.00 $0.00 $0.00 $76,641.00

1 How Mortgage Refinancing Works

Mortgage refinancing replaces your current home loan with a brand-new loan having different terms, interest rates, or loan balances. The proceeds of the new mortgage pay off the outstanding balance of your existing lien, leaving you with new monthly obligations and a refreshed amortization schedule.

Lower Interest Rate

Securing a lower market interest rate reduces the finance charge on every dollar borrowed, immediately decreasing your monthly principal-and-interest bill and long-term interest costs.

Shorten Loan Term

Transitioning from a 30-year to a 15- or 20-year mortgage accelerates equity buildup. Even if your monthly payment remains similar, you eliminate years of compound interest payments.

Convert or Cash Out

Switch from an Adjustable-Rate Mortgage (ARM) to a predictable Fixed-Rate loan, or access home equity for debt consolidation, home improvements, or major life investments.

2 Evaluating the Break-Even Horizon & APR

Refinancing is not free. Lenders, title companies, appraisers, and county recorders charge closing costs, typically ranging between 2% and 5% of the loan value. The critical metric is determining whether you will stay in the home long enough to recover these out-of-pocket expenses.

The Break-Even Formula

The break-even point is the exact number of months required for cumulative interest or monthly payment savings to surpass all origination costs:

Break-Even (Months) = Total Upfront Closing Costs ÷ Monthly Savings

Example: If closing fees and points equal $6,000 and your monthly payment drops by $200, your break-even horizon is exactly 30 months (2.5 years).

Interest Rate vs. Annual Percentage Rate (APR)

The note rate is the pure percentage charged against the principal. The APR incorporates all upfront financing charges, discount points, and lender fees:

APR reflects the true annualized borrowing cost

Always compare loan estimates by APR rather than note rate alone to spot hidden fees and evaluate whether discount points genuinely save money.

3 Rate-and-Term vs. Cash-Out Refinancing

Feature Rate-and-Term Refinance Cash-Out Refinance
Primary Objective Lower interest rate, reduce payment, or change term length Liquidate accumulated equity into lump-sum cash
New Loan Balance Equal to existing balance plus optional rolled-in closing costs Higher than current balance (current balance + cash received)
Interest Rates Lowest available market rates for your credit tier Typically 0.125% to 0.50% higher due to added lender risk
Home Equity Impact Preserved and steadily increases as principal amortizes Reduced immediately; max loan-to-value (LTV) usually capped at 80%
Best Used For Optimizing monthly cash flow and cutting total lifetime interest High-ROI home renovations or consolidating 20%+ APR card balances

4 5 Situations Where Refinancing Does Not Make Sense

1

Moving Before the Break-Even Horizon

If your break-even period is 36 months and you intend to relocate or sell in 2 years, refinancing results in a net financial loss because you won’t stay long enough to recoup the closing expenses.

2

Resetting the Clock Near the End of Your Loan

If you have 12 years left on a 30-year mortgage and refinance into a new 30-year term to lower payments, you will pay substantially more in lifetime interest even at a slightly lower rate.

3

Minimal Rate Differential (< 0.50% Drop)

A tiny reduction in interest rate (such as 0.25%) rarely produces enough monthly cash flow savings to offset several thousand dollars in title, legal, underwriting, and appraisal costs.

4

Prepayment Penalties on Your Current Loan

Review your current mortgage documentation. If your existing lender enforces a severe prepayment penalty for terminating the loan early, the penalty could eliminate any refinancing advantages.

5

Recent Drop in Credit Score or Property Value

If local property values dipped or your credit score experienced a downturn, you may be subject to Private Mortgage Insurance (PMI) or higher tier pricing, negating rate gains.

5 Frequently Asked Questions

What are mortgage discount points?

Discount points represent prepaid interest purchased at closing to permanently lower your interest rate. One point equals 1% of the loan amount and typically reduces the annual interest rate by roughly 0.25%. Points make financial sense if you plan to keep the mortgage long past the point break-even period.

What is a "no-cost" refinance?

There is no truly free refinance. In a "no-cost" refinance, the lender either rolls the closing costs directly into your principal balance (increasing your debt) or increases the interest rate slightly to provide a lender credit that offsets closing fees.

Can I eliminate PMI by refinancing?

Yes. If your home has appreciated or you have paid down enough principal such that your loan balance is now 80% or less of the home's current appraised market value, refinancing into a new conventional loan can immediately remove Private Mortgage Insurance (PMI), yielding substantial monthly savings.

How many times can you refinance a mortgage?

There is no legal limit to how many times you can refinance. However, lenders frequently enforce seasoning requirements—often 6 months between refinances—and closing costs accrue on every new transaction.

Understanding your calculation

Method, example and limitations

How the calculation works

A refinance comparison models a new loan against the existing schedule, including the entered closing costs, term and interest assumptions.

Example to check

If closing costs are 3,000 and monthly savings are 100, a simple undiscounted break-even is 30 months, before changes in principal balance or other costs.

Before using the result

A longer term can lower payments while increasing total interest. Cash-out amounts, fees, taxes and time in the property affect the decision.

Calculation methodology · Report a result that needs review