Mortgage Refinance Calculator
Should I refinance? Break-even analysis, monthly savings & net benefit
A mortgage refinance replaces your existing home loan with a new one at a different rate or term. This calculator computes your exact monthly savings, closing cost break-even point, and total net benefit over your planned stay — the same analysis a mortgage broker runs to determine if refinancing is worth it in your situation.
How the Refinance Break-Even Is Calculated
The refinance decision comes down to one question: will you stay long enough to recoup the closing costs through monthly savings? The calculation uses the standard amortization formula to compute both payments, then divides closing costs by monthly savings to find break-even.
| Variable | Definition |
|---|---|
| Current Payment | P&I payment on existing loan (same amortization formula as your original mortgage) |
| New Payment | P&I payment at new rate and term applied to remaining balance |
| Closing Costs | All fees to originate the new loan (origination, appraisal, title, recording, etc.) |
| Break-Even | Months until cumulative savings cover all closing costs paid upfront |
Example: Refinancing a $280,000 balance from 7.5% to 6.5% (30-year) drops your P&I from $1,958 to $1,770 — saving $188/month. With $5,000 in closing costs, break-even is 27 months. If you plan to stay 7+ years, you net $10,768 over that period after accounting for closing costs.
⚠️ Expert Pro-Tip
The Hidden Cost of Extending Your Term: When you refinance a 25-year remaining mortgage back to 30 years, you add 5 years of payments — even if the rate drops significantly. Example: $280k at 7.5% with 25 years left = $2,097/month × 300 payments = $629,100 total. Refinancing to 30 years at 6.5% = $1,770/month × 360 payments = $637,200 total. You save $327/month but pay $8,100 MORE over the life. The fix: refinance to a 15 or 20-year term, or refinance to 30 years but make extra principal payments to maintain your original payoff date.
Frequently Asked Questions: Mortgage Refinancing in 2026
How much rate drop do I need to make refinancing worth it?
The old 1% rule is outdated. The real test is whether your monthly savings recoup closing costs before you move or pay off the home. At 2026 closing costs of $4,000–$8,000, even a 0.5% rate reduction can make sense if you stay 3+ years. On a $300,000 loan, dropping from 7.5% to 6.75% saves about $150/month — recouping $6,000 in closing costs in 40 months.
What are typical refinance closing costs in 2026?
Refinance closing costs typically run 2%–5% of the loan amount. On a $300,000 loan, expect $6,000–$15,000. Key fees include origination (0.5%–1%), appraisal ($500–$800), title insurance ($1,000–$2,000), and recording fees. Some lenders offer "no-cost" refinances by rolling fees into the rate — you pay a slightly higher rate but no upfront cash.
Should I refinance to a shorter term?
Refinancing from a 30-year to a 15-year mortgage makes sense if you can afford the higher payment and want to build equity faster. In 2026, 15-year rates are typically 0.4%–0.6% lower than 30-year. On a $300,000 loan, that's $516 more per month but $150,000+ in total interest savings and home ownership 15 years sooner.
When does refinancing never make sense?
Refinancing is a bad idea if: (1) you plan to sell or pay off the home before break-even, (2) the new rate is higher than your current rate, (3) you're close to paying off the loan and would reset interest front-loading, or (4) closing costs exceed cumulative savings over your realistic stay. Also avoid "cash-out" refinancing to fund consumption — you're converting equity into high-interest spending.
Mortgage Refinance Calculator
Current Loan
New Loan
Your Results
Based on your results — what to do next:
Calculate your full new mortgage payment
Your refinanced payment is $1,769.79/mo. See the full PITI breakdown including taxes and insurance.
Does your income still support this?
A $1,769.79/mo payment should be under 28% of your gross monthly income. Verify before signing.
Put those savings to work
$299.38/mo in savings could compound into significant wealth — invest it instead of spending it.