How to use this calculator
Enter your current mortgage details in section one: your remaining balance, interest rate, and how many months are left on your loan. The calculator will estimate your current payment, or you can enter it manually if yours differs (for example, if you've been making extra payments).
In section two, enter the new loan terms you're considering. Choose a term length, enter the offered rate, and include any closing costs or discount points. Toggle the option to roll costs into the loan if you prefer no out-of-pocket expense.
The results show your new payment, monthly savings, the exact month you break even, and a full cost comparison between staying with your current mortgage and refinancing.
When refinancing makes sense
| Scenario | Likely worth it? | Key factor |
|---|---|---|
| Rate drops 1%+, staying 5+ years | Yes | Strong savings, fast break-even |
| Rate drops 0.5%, large balance | Maybe | Run the numbers, balance matters |
| Switching from 30-yr to 15-yr | Often | Higher payment, huge interest savings |
| Selling in under 2 years | Rarely | Unlikely to hit break-even |
| Resetting to a new 30-yr term | Depends | Lower payment, but more total interest |
| Removing PMI via refi | Sometimes | Compare PMI cost vs. refi closing costs |
Frequently asked questions
How do you calculate the break-even point on a refinance?
Divide your total closing costs by your monthly payment savings. For example, if closing costs are $6,000 and you save $200 per month, your break-even point is 30 months. After that, every month of savings is money in your pocket.
What interest rate drop makes refinancing worth it?
The old rule of thumb was a 1 to 2 percentage point drop, but it really depends on your loan balance, closing costs, and how long you plan to stay. On a large balance, even a 0.5% rate drop can save significant money. Use the break-even calculation to find your specific number.
Should I roll closing costs into my refinanced loan?
Rolling closing costs into the loan means no out-of-pocket expense, but you pay interest on those costs for the life of the loan. Paying upfront is cheaper long-term if you have the cash available.
Is it worth refinancing if I plan to sell in a few years?
Only if your break-even point comes before you sell. Calculate the break-even month and compare it to your planned timeline. If you would sell before breaking even, you would lose money on the refinance.
What are discount points and should I buy them?
Discount points are an upfront fee paid to the lender to reduce your interest rate. One point equals 1% of the loan amount and typically lowers the rate by about 0.25%. Points make sense if you plan to keep the loan long enough for the monthly savings to exceed the upfront cost.