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What this refinance calculator measures
Most refinance tools stop at "your payment drops by X." That is the number lenders advertise, and it is the least useful one. What matters is what you gain after paying to get the new loan, and whether that gain survives the time you actually spend in the house. This calculator reports the payment change, the month you recover your costs, the change in interest over the life of the loan, and a net result over the number of years you expect to keep the loan.
How it works
Start with what you owe today, your rate and how many years are left. The calculator derives your current payment from those three numbers, so you do not need to look it up. Then enter the offer: new rate, new term, closing costs, and any cash out. Choose whether closing costs are paid in cash or rolled into the balance. Finally, set how long you will hold the new loan, because that is what turns a monthly saving into a real answer.
How the numbers are calculated
New loan = balance + cash out + costs rolled in. Break-even = closing costs ÷ monthly saving. For the net figure, the tool adds up payments over your holding period plus the balance still owed for each option, adds any cash costs on the refinance side, subtracts cash you took out, and takes the difference.
Worked example: $300,000 balance, 7.25%, 27 years left
Your payment today is $2,112.58. A 30-year refinance at 6.25% with $6,000 of costs gives $1,847.15, a saving of $265 a month and a break-even of 23 months. Over seven years you finish about $13,484 ahead.
Change the new term to 25 years and the payment is $1,979.01. The monthly saving shrinks to $134 and break-even stretches to about 3 years 9 months, but you pay roughly $90,800 less interest over the loan and finish about $16,258 ahead over seven years. The lowest payment and the lowest total cost are different loans.
What else to weigh
The term you choose is a hidden decision
Refinancing into a fresh 30-year loan resets your amortization. Early payments are mostly interest, so a reset gives back part of the equity you built. If you want the smaller payment but not the extra years, send the difference to principal and check the result on the payoff calculator.
Points and rates are a package
A lower quoted rate may come with discount points. Test the offer with the points calculator to see whether paying up front for the rate actually pays back.
Sometimes another tool fits better
If you just received a lump sum and want a lower payment without new closing costs, look at the recast calculator. If your loan is FHA and you are near 20% equity, compare the payment with the FHA calculator. To see the payment on a fresh purchase, use the main mortgage calculator.
Estimate only. Your lender's Loan Estimate lists the real rate and costs.
Frequently asked questions
How do I know if refinancing is worth it?
Divide your closing costs by your monthly savings to get the break-even month, then ask whether you will keep the new loan longer than that. In the default example, $6,000 of costs and a $265 monthly saving break even in under two years. If you might move before your break-even, refinancing loses money even though the payment is lower.
What are typical refinance closing costs?
They commonly run a few percent of the loan amount and include the appraisal, title work, lender fees and recording charges. Get a Loan Estimate from at least two lenders and enter the total in the closing costs field. A "no-closing-cost" refinance is possible but usually comes with a higher rate or costs rolled into the balance.
Does refinancing reset my mortgage clock?
Yes, if you choose a new 30-year term. Going from 27 years remaining to a fresh 30 lowers the payment but adds three years of interest. Choosing a term close to what you have left keeps your payoff date on track, as the two examples on this page show.
What is the difference between a rate-and-term and a cash-out refinance?
A rate-and-term refinance replaces your loan with a new rate, term or both, keeping the balance about the same. A cash-out refinance borrows more than you owe and hands you the difference. Lenders usually price cash-out loans higher and cap how much equity you can take, so the calculator lets you enter the cash-out amount and counts it against the result.
Should I roll closing costs into the new loan?
It saves cash today but you pay interest on the costs for the life of the loan and start with a higher balance. It also makes the break-even a little longer. If you plan to move within a few years, paying in cash is usually cheaper.
Are there cheaper refinance options for government loans?
Some government programs offer streamlined refinances with less paperwork, including FHA streamline and the VA interest rate reduction refinance loan. They have their own rules and fees, so ask a lender who handles those loans.