Mortgage Refinance Calculator – Compare Rates & Savings
Use our free mortgage refinance calculator to compare your current mortgage with a new refinance rate. Estimate monthly savings, interest savings, closing costs, and break-even time.
Current Loan
I know my remaining balance & monthly mortgage details.
New Loan (Refinance)
Proposed refinance interest rate, term length, points, and estimated fees.
Related Calculators
Mortgage Refinance Calculator
Use our Mortgage Refinance Calculator to compare your current home loan with a potential refinance.
Enter your existing mortgage details, proposed refinance rate, new loan term, and estimated closing costs to calculate:
- Current monthly mortgage payment
- Estimated new monthly payment
- Monthly payment savings
- Estimated interest difference
- Refinance closing costs
- Break-even period
- New loan payoff timeline
- Potential long-term cost or savings
A lower refinance mortgage rate can reduce your monthly principal-and-interest payment, but the interest rate alone does not determine whether refinancing makes financial sense.
Closing costs, the new loan term, remaining balance, and how long you expect to keep the mortgage can all affect the result.
How to Use the Mortgage Refinance Calculator
1. Enter Your Current Mortgage Balance
Enter the principal amount you still owe on your mortgage.
For example: Current balance: $300,000
Use your remaining loan balance rather than the amount you originally borrowed.
2. Enter Your Current Mortgage Rate
Enter the interest rate on your existing mortgage.
Example: Current rate: 7.25%
3. Enter Your Remaining Loan Term
Enter how many years or months remain on your existing mortgage.
For example: 25 years remaining
This matters because refinancing can restart or change your repayment schedule.
4. Enter the New Refinance Mortgage Rate
Enter the interest rate offered for the potential new mortgage.
Example: New refinance rate: 6.25%
Do not assume an advertised refinance mortgage loan rate is necessarily the rate you will receive. Your actual rate can depend on the loan and borrower circumstances.
5. Choose the New Loan Term
Select the term of the refinanced mortgage. Common choices include 10, 15, 20, or 30 years.
A longer term can reduce the required monthly payment but may increase the amount of time you remain in debt.
6. Enter Estimated Closing Costs
Refinancing generally involves replacing your existing mortgage with a new loan, which can involve closing costs and fees.
Example: Closing costs: $6,000
The calculator uses this amount when estimating your refinance break-even period.
Mortgage Refinance Example
Suppose your current mortgage has the following parameters:
| Mortgage Detail | Current Loan | Refinance |
|---|---|---|
| Balance | $300,000 | $300,000 |
| Interest Rate | 7.25% | 6.25% |
| Loan Term | 25 years remaining | 25 years |
| Closing Costs | — | $6,000 |
The approximate principal-and-interest payment on the current loan would be:
$2,168 per month
At the lower refinance rate, the estimated payment would be:
$1,979 per month
Approximate monthly difference: $189 savings
If refinancing costs $6,000:
In this simplified example, you would need to keep the refinanced mortgage for roughly 32 months before the cumulative monthly payment difference equals the upfront refinance cost.
What Are Refinance Mortgage Loan Rates?
A refinance mortgage rate is the interest rate charged on the new mortgage that replaces your existing home loan.
When refinancing, you are not simply changing the interest rate on your existing mortgage. You are generally taking out a new mortgage that pays off and replaces the previous loan.
Your new loan can have a different:
- Interest rate
- Loan term
- Monthly payment
- Closing cost
- Loan amount
- Mortgage structure
This is why comparing only the old interest rate with the new interest rate can be misleading.
How Do Refinance Mortgage Rates Affect Your Payment?
Mortgage payments are strongly influenced by loan balance, interest rate, and loan term. For a fixed-rate mortgage, the monthly principal-and-interest payment is calculated using:
Standard Amortization Formula
Where M is monthly payment, P is principal balance, r is monthly interest rate (APR / 12), and n is total monthly payments (years × 12).
A lower interest rate generally reduces the required payment when the balance and loan term remain unchanged. However, refinance comparisons become more complicated when the new loan has a different term.
Is a Lower Refinance Rate Always Better?
Not necessarily.
Imagine you have 15 years remaining on your current mortgage but refinance into a new 30-year mortgage. Your monthly payment could fall substantially.
However, part of that decrease happens because you are spreading repayment across another 30 years rather than because the interest rate alone is lower.
That's why our mortgage refinance calculator compares more than monthly payments. Look at:
- Monthly payment
- Closing costs
- Break-even period
- Remaining repayment time
- Total estimated interest
- Total cost of the new mortgage
What Is a Refinance Break-Even Point?
The refinance break-even point estimates how long it may take for monthly savings to recover the upfront cost of refinancing.
Simplified Break-Even Formula
Example: $5,000 Closing Costs ÷ $200 Monthly Savings = 25 Months to break even.
If you expect to sell the home or refinance again before reaching the break-even point, the upfront cost may outweigh the payment savings in this simplified comparison.
How Much Lower Should a Mortgage Rate Be Before Refinancing?
There is no universal rule saying your new mortgage rate must be exactly 0.5%, 1%, or another specific amount lower before refinancing makes sense.
Instead, compare the entire transaction:
- Your current mortgage rate vs proposed refinance rate
- Remaining loan balance and remaining term
- New loan term and closing costs
- Monthly savings and lifetime interest savings
- Break-even period and how long you expect to keep the mortgage
Interest Rate vs. APR & Mortgage Points
Interest Rate
The rate charged on the borrowed principal. It is the primary driver of your base monthly principal-and-interest payment.
APR (Annual Percentage Rate)
Reflects the interest rate combined with lender origination fees, discount points, and other closing charges. Useful for comparing total lender costs.
Mortgage Points (Discount Points): Upfront amounts paid to lower your interest rate. One point equals 1% of the loan amount. A break-even calculation helps determine if rate savings justify the upfront cost.
15-Year vs. 30-Year Refinance & Cash-Out Options
| Option | Monthly Payment | Total Interest | Primary Benefit |
|---|---|---|---|
| 15-Year Refinance | Higher | Much Lower | Builds equity quickly & eliminates debt sooner |
| 30-Year Refinance | Lower | Higher | Minimizes monthly payment obligations |
| Rate-and-Term | Varies | Optimized | Lowers rate or changes term without taking cash out |
| Cash-Out Refinance | Higher | Higher | Accesses home equity as liquid cash |
When Might Refinancing Not Save Money?
- Closing costs are high relative to monthly savings
- You expect to move or sell the home soon
- Very little time remains on your current mortgage
- The new term substantially extends repayment and increases lifetime interest
- The new loan balance increases due to rolled-in fees or cash out
Frequently Asked Questions
A mortgage refinance calculator compares your existing mortgage with a potential new mortgage. It can estimate changes in monthly payment, interest costs, closing costs, and break-even time.
Refinancing means replacing your existing mortgage with a new mortgage. The new loan can have a different interest rate, loan term, payment, loan amount, and closing costs.
Refinance mortgage loan rates are the interest rates offered on mortgages used to replace existing home loans. Actual rates can vary based on market conditions, mortgage type, loan characteristics, and borrower qualifications.
Not necessarily. Rates and pricing can differ depending on loan purpose, lender, mortgage program, loan characteristics, and borrower circumstances. Use an actual refinance offer when calculating potential savings.
There is no single percentage difference that works for everyone. Calculate the monthly savings, closing costs, break-even period, loan term, and estimated total interest instead of relying on a fixed rule.
First calculate the principal-and-interest payment on your current mortgage. Then calculate the payment under the proposed refinance. The difference provides an estimate of monthly payment savings when the comparison uses equivalent assumptions. You should then account for refinance costs and any difference in loan term.
The break-even point estimates how long it takes for accumulated monthly savings to equal the cost of refinancing. A simplified formula is: Refinance Costs ÷ Monthly Savings = Break-Even Months.
It may or may not be. The answer depends on the mortgage balance, closing costs, remaining loan term, new loan term, monthly savings, and how long you expect to keep the mortgage. Use the calculator with both rates to compare the actual numbers.
A one-percentage-point reduction can make a significant difference in some mortgage scenarios, but it still does not guarantee that refinancing is worthwhile. Closing costs and loan-term changes must also be considered.
It can if you choose a new 30-year mortgage. However, refinancing does not require choosing a 30-year term. Other terms (such as 15 or 20 years) may be available. Compare the new term with the remaining term of your current mortgage.
It can. A lower interest rate may reduce the required monthly payment. Extending the loan term may also lower the payment, so determine why the payment is decreasing rather than assuming the entire reduction comes from the lower rate.
Refinancing can involve closing costs, origination fees, appraisal costs, points, and other charges associated with originating the replacement mortgage. Those costs should be included when determining whether the refinance produces enough savings.
APR is a broader measure of borrowing cost than the interest rate alone because it can incorporate certain additional loan charges and points. It can help when comparing similar refinance offers.
Not automatically. A lower advertised rate could involve higher upfront points or fees. Compare the rate, APR, points, closing costs, loan term, monthly payment, and total estimated cost before choosing between offers.
Yes, depending on available loan options and qualification. A shorter term can increase the required monthly payment while reducing the overall length of repayment and lifetime interest charges.
It may be possible to refinance more than once, subject to lender, mortgage program, eligibility, timing, and cost considerations. Each refinance should be evaluated as a new financial transaction.
Not necessarily. A lender may cover upfront costs in exchange for a higher interest rate or structure those costs into the loan balance. Compare the long-term cost rather than focusing only on how much cash is required at closing.
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