Mortgage Refinance Calculator

Refinancing a mortgage means replacing your existing home loan with a new one, usually to secure a lower interest rate, reduce your monthly payment, shorten your term, or tap home equity. Because a new loan comes with closing costs — typically 2% to 5% of the loan amount — the key question is whether the long-run savings justify that upfront expense.

The most common reason to refinance is a drop in interest rates. A lower rate reduces the portion of each payment that goes to interest, lowering your monthly payment and the total interest paid over the life of the loan. A widely cited rule of thumb suggests refinancing becomes worth considering when you can cut your rate by roughly 0.5 to 1 percentage point, though the real test is your personal break-even point.

The break-even point is the number of months it takes for your accumulated monthly savings to equal the closing costs. If your refinance costs $4,000 and saves $200 a month, you break even in 20 months. If you plan to stay in the home well beyond that point, refinancing likely pays off; if you might move or sell sooner, it may not.

Term matters too. Refinancing into a fresh 30-year loan lowers your payment but can increase total interest if it resets the clock — you may pay less each month yet more overall. Refinancing into a shorter term, like 15 years, raises the payment but can save a large amount of interest and build equity faster. Some borrowers also do a cash-out refinance, borrowing more than they owe to access equity, which increases the balance and should be weighed carefully.

Beyond rate and term, consider that refinancing restarts amortization, so you return to paying mostly interest early on. Look at total interest, not just the monthly payment, and factor in how long you'll keep the home. This calculator brings those numbers together so you can decide with clear eyes rather than chasing a lower payment alone.