How the Mortgage Refinance Calculator works
A lower rate does not automatically make a refinance worthwhile. Closing costs must be recovered, and restarting with a longer term can reduce the payment while increasing the time spent paying interest.
Method: Break-even months = refinance closing costs ÷ monthly payment savings.
Inputs to review
- Current loan balance: Use a realistic current value and test a conservative alternative.
- Current interest rate: Use a realistic current value and test a conservative alternative.
- Years remaining: Use a realistic current value and test a conservative alternative.
- New interest rate: Use a realistic current value and test a conservative alternative.
- New loan term: Use a realistic current value and test a conservative alternative.
- Refinance closing costs: Use a realistic current value and test a conservative alternative.
How to interpret the result
Focus on the break-even month and compare it with how long you expect to keep the loan. Also compare total remaining interest using the same payoff date, not only the new monthly payment.
Assumptions and limitations
The estimate excludes taxes, escrow adjustments, points financed into the balance, prepayment penalties, and differences in mortgage insurance.
Recalculate when rates, balances, income, goals, or time horizons change. A useful estimate is a range built from several plausible scenarios, not a single precise-looking number.