Free Mortgage Refinance Calculator

When refinancing is worth it

Refinancing replaces your existing mortgage with a new one. It costs money upfront in closing costs, so the question is whether what you save afterward exceeds what you spend to get there — and "save" can mean either a lower monthly payment or less interest over the life of the loan. Those two goals often pull in opposite directions.

Two different reasons to refinance

Lowering the payment usually means keeping a similar or longer term at a lower rate. Taking that same $280,000 at 6.2% over a fresh 30 years would drop the payment to about $1,715 — roughly $248 a month less. That helps cash flow, but restarting the clock means paying interest over a longer period, which can increase lifetime cost even at a better rate.

Reducing total interest usually means shortening the term, which typically raises the payment while cutting lifetime interest sharply, as the example shows. Deciding which you're optimizing for should come before comparing offers.

How break-even works

When the new payment is lower, break-even is simply closing costs divided by monthly savings. Spend $4,500 to save $250 a month and you recover the cost in about 18 months. Stay past that point and the refinance pays; sell or refinance again before it and you've lost money on the transaction.

This makes your expected time in the home the deciding variable. A refinance that breaks even in two years is excellent if you're staying ten and pointless if you're moving next year. When the payment rises instead, there's no monthly break-even to compute — the case has to rest on lifetime interest.

The reset-the-clock problem

Refinancing into a new 30-year loan when you're seven years into your current one means paying for 37 years of housing debt in total. Because early payments are mostly interest, restarting puts you back at the front of that curve, where very little goes toward principal.

One way to get the benefit without the cost: refinance to the lower rate and longer term for the safety of a lower required payment, then voluntarily pay the amount you were paying before. You keep flexibility in a hard month while still retiring the loan early.

What cash-out refinancing changes

A cash-out refinance borrows more than you owe and pays you the difference, secured by your home. Rates are usually better than unsecured borrowing, which is why it's often used for renovations or consolidating higher-rate debt.

The trade is real, though: you're converting unsecured debt into debt backed by your house, and stretching it over a much longer period. Consolidating a five-year obligation into a thirty-year mortgage can lower the payment while increasing what you ultimately pay — and the consequences of falling behind become far more serious.

Costs to confirm before deciding

• Closing costs — origination, appraisal, title, and recording fees, commonly a few thousand dollars.
• Points — optional upfront payments that buy a lower rate; worth it only if you stay long enough.
• Prepayment penalties on your existing loan, though these are uncommon on modern mortgages.
• "No-cost" refinances, which usually fold the costs into the balance or the rate rather than eliminating them.
• Mortgage insurance — refinancing can remove it if you've built enough equity, or trigger it if you haven't.

What this calculator doesn't include

It compares principal and interest only. It doesn't model taxes and insurance (which don't change when you refinance), points, mortgage insurance changes, or the tax treatment of mortgage interest. It assumes fixed rates on both loans and that you keep the new one to term. Request a Loan Estimate from each lender you're considering — the format is standardized by law, which makes offers genuinely comparable.