Mortgage Refinance Calculator
How it Works
01Current Mortgage
Enter your existing loan terms and due date
02New Loan Terms
New rate, term, points, and refinance costs
03Breakeven Analysis
See monthly savings and when refi costs are recouped
04Recommendation
Clear yes/no verdict + full PDF comparison
How to Decide If Refinancing Is Worth It
Should you refinance your mortgage? The answer depends on exact numbers: how much you still owe, your current rate vs the new rate, how long you plan to keep the home, and how much the refinance itself costs. This calculator models all of those variables and produces a definitive yes/no recommendation backed by breakeven and lifetime-savings math.
It simulates your current mortgage forward from the original due date to the refinance date, computing the remaining balance accurately. Then it models the new loan with all closing costs (points, up-front fees, cash in/out) and compares both scenarios head-to-head.
💡 The Breakeven Question
Refinancing saves money only if you keep the new loan past the breakeven period — typically 2-5 years. Refinance costs (points + closing fees) usually total 2-4% of the loan balance. If you'll sell or refinance again before breakeven, the savings never materialize.
Supports 30+ currencies, multiple compounding conventions (US/UK monthly, Canadian semi-annually, quarterly, annual), and both cash-in (paying down extra at refi) and cash-out (borrowing more against equity) scenarios.
How to Use the Mortgage Refinance Calculator
The Refinance Math
Using the amortization formula, the remaining balance after N months is:
Balance = P × (1+r)N − M × ((1+r)N − 1) / r
where P = original principal, r = monthly rate, N = months elapsed, M = original monthly payment. This gives the exact payoff amount of the existing loan at the moment of refinancing.
New Principal = Current Balance + Points Cost + Closing Costs + Cash In/Out. Positive cash-in/out = borrowing more (cash-out refi). Negative = paying down at closing (cash-in refi). Most rate-and-term refinances use zero cash adjustment — the new loan just refinances the existing balance plus fees.
Monthly Savings = Old Monthly − New Monthly. Breakeven (months) = (Points + Closing) ÷ Monthly Savings. Typical refi breakeven is 24-60 months. If you plan to stay past breakeven, you come out ahead. The longer past breakeven, the more savings.
Lifetime Savings = (Keep Current Total) − (Refinance Total). Keep Current Total = old monthly × remaining months. Refinance Total = new monthly × new term months + up-front costs. Positive lifetime savings means refi wins; negative means keep current.
Example: $300K Original, Refinancing After 5 Years
A $300K original mortgage, 30-year term at 3.5%, refinancing after 5 years at various new rates:
| New Rate | New Monthly | Monthly Savings | Breakeven | Verdict |
|---|---|---|---|---|
| 3.75% (higher!) | $1,407 | −$60/mo | Never | Keep current |
| 3.25% (−0.25%) | $1,317 | +$30/mo | 125 months | Marginal |
| 2.75% (−0.75%) | $1,225 | +$122/mo | 31 months | Refinance |
| 2.25% (−1.25%) | $1,140 | +$207/mo | 18 months | Strong refi |
General rule: a 1%+ rate drop typically produces fast breakeven (under 3 years), making refi clearly worthwhile. Smaller drops need you to keep the loan longer to pay off. A rate increase only makes sense for cash-out or term restructuring goals, not pure interest savings.
Who Uses This Calculator?
Technical Reference
Key Takeaways
Refinancing is one of the highest-value financial decisions a homeowner can make — or one of the most expensive mistakes if the math doesn't work. This calculator removes the guesswork by modeling every variable precisely and producing a clear recommendation.
Three rules of thumb: (1) Rate drop of 0.75%+ is usually worth refinancing if you'll stay 3+ years. (2) Breakeven under 2 years is excellent — almost always refinance. (3) Cash-out refi requires careful analysis — the borrowed amount has to justify the new higher payment and interest over the loan life.
Related: Mortgage Rate Calculator, Mortgage Points Calculator, Mortgage Prepayment. More in the Math & Science Calculators Collection.
Frequently Asked Questions
When should I refinance my mortgage?
Generally when current rates are at least 0.75-1% below your existing rate AND you'll keep the new loan past the breakeven period (usually 2-4 years). If either condition fails, skip the refi. This calculator produces the exact breakeven for your specific numbers.
What is a breakeven point for refinancing?
The number of months after refinancing at which your cumulative monthly savings equal the up-front refinance costs (points + closing). Formula: Breakeven = Total refi costs ÷ Monthly savings. Before breakeven, you've lost money. After breakeven, every month is pure savings.
What's the difference between rate-and-term refinance and cash-out refinance?
Two different goals:
- Rate-and-term refi: Replace existing loan with new loan at different rate/term. Goal is savings. New loan principal ≈ current balance + fees. Cash in/out = 0 in this calculator.
- Cash-out refi: Replace existing loan with larger new loan, taking the difference as cash. Goal is accessing equity. New loan principal > current balance. Cash in/out > 0.
How much does refinancing cost?
Typically 2-5% of the loan balance. Main components: loan origination fee (0.5-1%), appraisal ($300-$700), title insurance ($500-$2,000), credit report, underwriting, recording fees, and optionally points (1%/point). On a $300K refi, expect total costs of $6,000-$15,000. Get a Loan Estimate from each lender for exact figures.
Can I refinance with bad credit?
Yes, but at less favorable rates. Conventional refi typically requires 620+ FICO; FHA streamline refi can go lower. Bad credit often eliminates the rate savings that justify refinancing in the first place. Work on credit improvement first, then refinance. Note: this calculator models the math independent of credit — ensure your quoted rate reflects your actual credit tier.
Does refinancing restart my mortgage?
Yes — a new mortgage with its own term length replaces the old one. If you're 5 years into a 30-year and refinance to a new 30-year, you're back to 30 years of payments (35 total). To avoid extending total payoff, refinance to a shorter term or continue making prepayments on the new loan. This calculator shows total lifetime cost including the restart, so the trade-off is explicit.
What documents do I need to refinance?
Typical: recent pay stubs (30 days), W-2s or 1099s (2 years), tax returns (2 years, especially for self-employed), bank statements (2 months), mortgage statement and insurance declaration page, and proof of other assets/debts. Prepare these before applying to speed up underwriting — usually takes 30-45 days total for the refi to close.
Author Spotlight
The ToolsACE Team
Our specialized research and development team at ToolsACE brings together decades of collective experience in financial engineering, data analytics, and high-performance software development.
Disclaimer
The results provided by this tool are for informational purposes only and do not constitute financial, tax, legal, or investment advice. Always seek the advice of a qualified financial advisor, accountant, or legal professional regarding your specific situation.