Refinance Calculator 2026
Calculate monthly savings, break-even point, and total interest saved by refinancing your mortgage.
If refinancing from 7.5% to 6.5% saves you $200/month in principal and interest, and closing costs are $6,000, your break-even point is 30 months (2.5 years). If you plan to stay longer, refinancing makes financial sense.
Current Monthly Payment
$2,216.97
New Monthly Payment
$1,896.20
Monthly Savings
$320.77
Break-Even Point
19 months
Total Interest Saved
$-17,541.41
Typical closing costs: 2–5% of loan amount. Break-even = closing costs ÷ monthly savings.
Typical closing costs: 2–5% of loan amount. Break-even = closing costs ÷ monthly savings.
About This Calculator
Mortgage refinancing replaces your current loan with a new one at a different rate or term. The core question is always: how long until the monthly savings offset the upfront closing costs?
Break-even analysis is straightforward: divide closing costs by monthly savings. $8,000 in closing costs ÷ $250 monthly savings = 32 months. If you stay in the home more than 32 months, refinancing adds up.
Two main reasons to refinance: (1) Rate-and-term refinance — lower your interest rate or change from 30 to 15 years. (2) Cash-out refinance — tap home equity to pay off debt, fund renovations, or invest. Cash-out refinances carry higher rates and reset your loan term.
Mortgage rates have a 0.5–1% premium for refinances vs purchase loans. Factor in this spread when evaluating deals. The "rule of thumb" that you need to drop rates by 1% before refinancing is outdated — what matters is your break-even, not the rate gap.
How to Use
- 1Enter your current loan balance (not original loan — your remaining balance).
- 2Enter your current interest rate and remaining years on the loan.
- 3Enter the new interest rate you've been offered and the new loan term.
- 4Enter estimated closing costs (typically 2–5% of loan amount; ask your lender for a Loan Estimate).
- 5Review break-even point in months — if you plan to stay longer than that, refinancing is financially beneficial.
Formula & Methodology
Monthly savings = Current P&I − New P&I. Break-even months = Closing Costs ÷ Monthly Savings. Total interest saved = (Current remaining interest) − (New total interest). P&I = Loan Balance × [r(1+r)^n / ((1+r)^n − 1)].
Frequently Asked Questions
When does refinancing make sense?
Refinancing makes sense when: (1) you can lower your rate by at least 0.5%, (2) the break-even period is shorter than your planned stay in the home, and (3) you've built enough equity (lenders usually require 20% for best rates). Also consider refinancing to shorten your term or remove PMI if your home has appreciated.
What are typical refinancing closing costs?
Expect 2–5% of the loan amount: origination fee (0.5–1%), appraisal ($300–$600), title search and insurance ($700–$1,500), prepaid property taxes, and homeowner's insurance escrow. Total is often $4,000–$8,000 on a $300K loan. Some lenders offer "no-cost" refinances at 0.125–0.25% higher rate.
How many times can I refinance my mortgage?
There is no legal limit on how many times you can refinance. However, each refinance incurs closing costs and restarts your amortization schedule. Frequent refinancing is only beneficial if each event has a break-even period shorter than your expected stay and the rate savings are real.
Sources & References
- CFPB — Should I Refinance My Mortgage?
- Freddie Mac — Refinance Overview
- Federal Reserve — Mortgage Rates Data
Last updated: 2026-04-12