Does this calculator include cash‑out refinance scenarios?

No. The focus here is on rate‑and‑term refinances using the remaining balance you already owe. If you plan to take extra cash out, the loan amount and payment structure will change, and you may want a more detailed analysis from a lender or financial advisor.

How should I handle discount points and lender credits?

Add any discount points and lender fees you pay up front to the refinance closing cost field. If a lender offers credits that reduce your out‑of‑pocket costs, subtract those from the total cost before entering it. This ensures the break‑even period reflects your true net cost.

Can I use this if I am changing the loan term (for example, from 30 years to 15 years)?

This calculator assumes the remaining term stays the same so that you can isolate the effect of rate changes. If you shorten the term, your payment may rise while total interest falls, which requires a different analysis focused on total interest and payoff timing rather than monthly savings alone.

Does this tool factor in tax deductions for mortgage interest?

No. It looks solely at pre‑tax payment savings and closing costs. The tax impact of mortgage interest depends on your filing status, whether you itemize deductions, and current tax laws. Consult a tax professional if potential changes to interest deductions are important in your decision.

Are the results guaranteed to match my lender’s estimates?

No. Lenders may use slightly different assumptions, rounding, or fee structures, and they will provide official Loan Estimates and Closing Disclosures that govern your actual payments and costs. Use this calculator for early‑stage planning and sanity checks, then rely on lender documents for final numbers.

finance calculator

Refinance Savings Calculator

Compare your current mortgage payment to a potential refi to see monthly savings and break-even time after closing costs.

Results

Monthly savings: $215 USD
Break-even months: 23.24

Overview

Refinancing your mortgage can lower your monthly payment, but it usually comes with closing costs and sometimes a new loan term. The key question is whether the lower payment is worth the upfront expense given how long you plan to stay in the home. This refinance savings calculator compares your current mortgage payment to a proposed refinance, estimates monthly savings, and calculates how many months it takes for those savings to recoup your closing costs (the break‑even period).

How to use this calculator

Check your latest mortgage statement or online account for your remaining balance, interest rate, and remaining term (months left on the loan).
Enter the remaining balance into the calculator along with your current APR and the number of months left.
Enter the new APR being offered by a lender for your refinance. Keep the term length aligned with your remaining term if you want a true apples‑to‑apples comparison.
Enter the total refinance closing costs, including lender fees, third‑party fees, and any discount points you will pay to reduce the rate.
Run the calculation to see your current payment, new payment, estimated monthly savings, and the break‑even period in months.
Compare the break‑even period to how long you realistically expect to keep the mortgage or stay in the home, and use that to help inform your refinance decision.

Inputs explained

Remaining balance: The current outstanding principal on your mortgage—the amount you still owe and plan to refinance. This typically appears on your mortgage statement; exclude any cash‑out amount you are considering beyond paying off the old loan.
Current APR: The annual percentage rate (interest rate) on your existing mortgage. Use the note rate for the loan’s interest; exclude escrow amounts for taxes and insurance.
New APR: The annual rate offered on your refinance quote. This is the new interest rate for the replacement mortgage and is used to compute the new monthly principal and interest payment.
Months left: The remaining number of months on your current mortgage term. For example, if you have 25 years left on a 30‑year loan, enter 300 months. This allows for a true term‑matched comparison between old and new payments.
Refinance closing costs: The total cost of refinancing your loan, including lender fees, third‑party charges (appraisal, title, etc.), and any discount points you pay up front. This amount is used to compute the break‑even period.

Outputs explained

Monthly savings: An estimate of how much lower your new monthly principal and interest payment would be compared with your current payment. A positive number indicates a lower payment; a negative number means the refinance increases your monthly payment.
Break-even months: The approximate number of months it takes for your cumulative monthly savings to equal the closing costs you paid. If you expect to sell the home or refinance again before this many months, you may not fully recoup the upfront refinance costs.

How it works

You enter your remaining loan balance, current interest rate, remaining term in months, the new proposed rate, and the total closing costs for the refinance.

The calculator estimates your current monthly principal and interest payment using standard fixed‑rate mortgage math based on the remaining balance, current rate, and months left.

It then computes the new monthly payment using the same remaining balance and new interest rate over the same remaining term (this model assumes you are not changing the term length).

Monthly savings are calculated as old payment minus new payment. If the new payment is higher, the "savings" number will be negative, signaling that the refinance may not save you money in pure payment terms.

Break‑even months are computed by dividing your refinance closing costs by the monthly savings. This tells you roughly how long you need to keep the new loan before you recoup what you paid to refinance.

If you expect to stay in the home longer than the break‑even period and the savings are meaningful, the refinance may be worth exploring further with a lender.

Formula

Monthly rate r = APR ÷ 12 (decimal)\nPayment (P&I) = balance × [r(1 + r)^n] ÷ [(1 + r)^n − 1]\nMonthly savings = oldPayment − newPayment\nBreak‑even months = refiCosts ÷ monthlySavings (if monthlySavings > 0)

When to use it

Checking whether a drop in mortgage rates justifies paying closing costs to refinance your existing loan.
Comparing multiple refinance offers that have different combinations of rates and closing costs (for example, low‑rate with high points vs higher‑rate with low fees).
Deciding whether to refinance when you are several years into a mortgage and are not sure you'll stay in the home for a long time.
Evaluating whether to roll closing costs into the loan balance or pay them out of pocket, using monthly savings and break‑even as a guide.
Running quick scenarios before contacting lenders so you can see what rate or cost structure you might need for a refinance to make sense.

Tips & cautions

If you expect to sell or move within a few years, make sure your break‑even period is comfortably shorter than your expected time horizon in the home.
Include all one‑time costs—such as discount points and lender fees—in the refinance closing cost field to avoid understating your break‑even period.
Be careful when extending your loan term back out to 30 years; it can lower your payment but increase total interest paid over the life of the loan. This calculator assumes the remaining term stays the same for a clean comparison.
Look beyond the payment: also consider how much total interest you will pay over the rest of the loan with and without refinancing, especially if you are near the beginning of your amortization schedule.
Check whether refinancing affects private mortgage insurance (PMI), property taxes, or homeowner’s insurance; these can change your all‑in monthly cost even if principal and interest drop.
The calculator assumes a fixed‑rate, fully amortizing mortgage and does not support interest‑only periods, adjustable rates, or balloon payments.
It keeps the remaining term constant to focus on the effect of rate changes; actual refinance offers may reset your term to a new length, which will change total interest paid.
It does not model changes to PMI, property taxes, insurance, or escrow requirements that might affect your true monthly out‑of‑pocket cost.
It ignores the opportunity cost of using cash for closing costs or the potential tax implications of mortgage interest; those factors may be important depending on your situation.
Results are approximate and based on your inputs; lenders may calculate payments and costs slightly differently depending on exact loan terms and timing.

Worked examples

$280,000 remaining balance, 6.75% to 5.5%, 300 months left, $5,000 costs

Current payment is calculated from a $280,000 balance at 6.75% APR over 300 months.
New payment is calculated using the same balance and term at 5.5% APR.
Monthly savings might be around $200–$220 depending on exact rounding (for illustration, ≈ $215/month).
Break‑even months ≈ $5,000 ÷ $215 ≈ 23 months, meaning you’d need to keep the new loan for just under two years to recoup closing costs.

Only 60 months left on the current loan

With just 5 years remaining, a rate drop produces much smaller monthly savings because most of the interest has already been paid.
The calculator shows a lower monthly savings amount, which makes the break‑even period much longer relative to your remaining time in the home.
In many such cases, the break‑even period can exceed the remaining term, suggesting that a refinance may not be worthwhile.

Comparing two refinance offers with different rate/cost combinations

Run the calculator with a lower‑rate, higher‑cost offer (for example, more points) and note the monthly savings and break‑even period.
Then run it again with a slightly higher rate but lower closing costs.
Compare the break‑even periods and monthly savings to see which offer better fits your expected time horizon and cash‑flow needs.

Deep dive

This refinance savings calculator helps homeowners quickly see whether a new mortgage rate justifies the cost of refinancing. By entering your remaining balance, current rate, new rate, remaining term, and closing costs, you can compare current and proposed payments, estimate monthly savings, and see how many months it will take to break even on refinance costs.

Use the tool to explore multiple rate and cost scenarios before you engage with lenders in depth. While it does not replace a full loan estimate or total interest analysis, it provides a clear, easy‑to‑understand starting point for deciding whether a refinance deserves a closer look.

FAQs

Does this calculator include cash‑out refinance scenarios?: No. The focus here is on rate‑and‑term refinances using the remaining balance you already owe. If you plan to take extra cash out, the loan amount and payment structure will change, and you may want a more detailed analysis from a lender or financial advisor.
How should I handle discount points and lender credits?: Add any discount points and lender fees you pay up front to the refinance closing cost field. If a lender offers credits that reduce your out‑of‑pocket costs, subtract those from the total cost before entering it. This ensures the break‑even period reflects your true net cost.
Can I use this if I am changing the loan term (for example, from 30 years to 15 years)?: This calculator assumes the remaining term stays the same so that you can isolate the effect of rate changes. If you shorten the term, your payment may rise while total interest falls, which requires a different analysis focused on total interest and payoff timing rather than monthly savings alone.
Does this tool factor in tax deductions for mortgage interest?: No. It looks solely at pre‑tax payment savings and closing costs. The tax impact of mortgage interest depends on your filing status, whether you itemize deductions, and current tax laws. Consult a tax professional if potential changes to interest deductions are important in your decision.
Are the results guaranteed to match my lender’s estimates?: No. Lenders may use slightly different assumptions, rounding, or fee structures, and they will provide official Loan Estimates and Closing Disclosures that govern your actual payments and costs. Use this calculator for early‑stage planning and sanity checks, then rely on lender documents for final numbers.

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This refinance savings calculator is for general informational purposes only and does not constitute financial, tax, or lending advice. It assumes a fixed‑rate, fully amortizing mortgage with a constant remaining term and does not model all costs, risks, or tax implications associated with refinancing. Always review official loan estimates, compare multiple offers, and consult with qualified professionals before making refinance decisions.