Mortgage Refinance Calculator: Is Refinancing Worth It?

Thinking about refinancing your mortgage? Our Mortgage Refinance Calculator can help you determine if it’s the right financial move. By comparing your current loan with potential new loan options, you can see potential savings, understand your break-even point, and make an informed decision.

Compare Your Refinance Options

Frequently Asked Questions (FAQ)

FAQ Index

Refinancing is typically worth it when you can secure a lower interest rate that will save you money over the life of the loan, even after accounting for closing costs. A common rule of thumb is that refinancing makes sense if you can reduce your interest rate by at least 0.5% to 1%. However, this depends on your specific situation, including how long you plan to stay in your home and your current loan balance.

The amount you can save depends on several factors: your current interest rate, the new rate you qualify for, your loan balance, and how long you plan to stay in your home. For example, refinancing a $200,000 mortgage from 4.5% to 3.5% could save you over $100 per month and tens of thousands in interest over the life of the loan. Our refinance calculator can help you estimate your potential savings.

Refinancing costs typically range from 2% to 5% of your loan amount and may include: application fees, appraisal fees, title insurance, attorney fees, origination fees, and recording fees. For a $200,000 mortgage, expect to pay between $4,000 and $10,000 in closing costs. Some lenders offer "no-cost" refinancing, but this usually means they're either rolling the costs into your loan or offering a higher interest rate.

The refinancing process typically takes 30 to 45 days from application to closing, though it can vary based on your lender, the complexity of your financial situation, and current market conditions. This timeline includes time for your application review, home appraisal, underwriting, and final approval. Having all your documentation ready upfront can help speed up the process.

The break-even point is the time it takes for your monthly savings to equal the total cost of refinancing. For example, if refinancing costs $3,000 and saves you $150 per month, your break-even point is 20 months. If you plan to stay in your home longer than the break-even period, refinancing could be beneficial — though that break-even is about monthly cash flow only, so check the total-interest figure too: a longer new loan term can shorten the break-even while still costing more overall, and a shorter term can do the reverse. Our calculator shows both, and flags it when they disagree.

If you plan to move before reaching your break-even point, refinancing may not be worth it. The closing costs might outweigh the savings you'll realize in the short term. However, if you can achieve significant monthly savings and have very low closing costs, it might still make sense. Consider factors like job stability, family plans, and local market conditions when making this decision.

Yes, you can refinance with less than 20% equity, but you'll likely need to pay Private Mortgage Insurance (PMI) on the new loan. Some loan programs, like FHA streamline refinancing or VA Interest Rate Reduction Refinance Loans (IRRRL), have more flexible equity requirements. The key is ensuring that the benefits of refinancing outweigh the additional cost of PMI.

Most lenders require a credit score of at least 620 for conventional refinancing, though you'll get better rates with scores of 740 or higher. For FHA refinancing, you may qualify with a score as low as 580. Your credit score affects not only your eligibility but also the interest rate you'll receive. If your score has improved since you got your original mortgage, you might qualify for better rates.

Switching to a 15-year mortgage can save you significantly on total interest costs and help you build equity faster. However, your monthly payments will be higher. This strategy works best if you can comfortably afford the higher payments and plan to stay in your home for many years. Consider your other financial goals, like retirement savings and emergency funds, before committing to higher payments.

Yes, you can often roll closing costs into your new mortgage balance, but this means you'll pay interest on these costs over the life of the loan. This approach can be helpful if you don't have cash available for closing costs, but it reduces your overall savings from refinancing. Alternatively, some lenders offer "no-cost" refinancing where they cover closing costs in exchange for a slightly higher interest rate.

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Method & sources

This calculator is educational, not advice. It estimates the monthly-payment and total-interest impact of refinancing from the numbers you enter; it is not a loan offer, a rate quote, or financial, tax or legal advice. Confirm any figure with a licensed lender before making a decision.

Formula

Current-loan payment = the standard amortising payment M = L x [r(1+r)^n] / [(1+r)^n - 1], computed from Original loan amount, Current interest rate and Original loan term.

Interest still to come on the current loan is found by running its amortisation schedule forward month by month, starting from Current balance at Current interest rate over Time remaining on loan (no extra payment), summing interest paid until the balance reaches zero.

Interest on the new loan is found the same way: starting from Current balance at New interest rate over the New loan term, adding any Extra monthly payment to the scheduled payment each month, summing interest until the balance reaches zero.

New monthly payment = the standard amortising payment for Current balance at New interest rate over the New loan term (Extra monthly payment is not included in this displayed figure, only in the schedule used for total-interest and break-even).

Monthly savings = Current-loan payment - New monthly payment.

Cash-flow break-even = ceil(Closing costs / Monthly savings), in months - only when Monthly savings is positive and Closing costs is greater than zero. If Monthly savings is positive and Closing costs is zero, break-even shows as immediate. If Monthly savings is zero or negative, break-even shows as no cash-flow break-even. This measures only how long the lower payment takes to recoup closing costs - see Limitations for why it can disagree with total interest saved.

Total interest savings = (Interest still to come on the current loan) - (Interest on the new loan) - Closing costs. Closing costs are assumed paid up front in cash, not rolled into the new loan balance.

If the monthly rate r is 0 in any of the above, the amortising-payment formula falls back to principal / number of payments, to avoid dividing by zero.

Rounding
Every dollar figure shown is rounded to the nearest cent for display only (toLocaleString with 2 decimal places); break-even months are rounded up to the next whole month (Math.ceil). The amortisation formula and the month-by-month schedule simulation both run on full floating-point precision internally, so results are not compounded off already-rounded numbers.
Inputs used
  • Original loan amount (required)
  • Current balance (required; the calculator refuses to run if this exceeds the original loan amount)
  • Original loan term in years, 1-50 (required)
  • Time remaining on loan in years, 0.1-50 (required; the calculator refuses to run if this exceeds the original term)
  • Current interest rate, 0-25% (required; 0% is accepted; used both for the current loan's payment and for the interest still to come on it)
  • New interest rate, 0-25% (required; 0% is accepted)
  • New loan term (select: 30, 15 or 10 years)
  • Closing costs (optional, defaults to $0)
  • Extra monthly payment (optional, defaults to $0; applied only to the new loan's schedule)
What this does not account for
  • Does not roll closing costs into the new loan balance - assumes they are paid up front in cash. A 'no-cost' refinance, or one where costs are added to the balance or offset by a higher rate, is not modelled.
  • Does not model adjustable rates, rate locks, discount points, or a rate that changes over the loan's life.
  • Covers principal and interest only - no property tax, homeowners insurance, HOA fees, or PMI, so it is not a full payment comparison the way the site's mortgage calculator is.
  • Break-even is judged purely on the sign of the monthly-payment change; it does not flag cases where the total-interest figure moves the opposite way from the monthly-payment figure (see limitations).
  • Does not model credit-score-driven rate offers, appraisal outcomes, or any lender fee beyond the single Closing costs figure entered.
  • No amortisation schedule, payoff date, or chart is shown - only the four summary figures.
Jurisdiction
United States. Uses U.S. conventional fixed-rate mortgage refinancing conventions (30/15/10-year new-loan terms); not jurisdiction-specific beyond that.
Source
CFPB consumer handout, "Should I refinance?" - weighing the cost of refinancing against the benefit, and comparing total interest paid before and after refinancing (the same trade-off this calculator's monthly-savings, break-even and total-interest-savings figures are built from). The handout does not itself publish the closing-costs / monthly-savings break-even formula - that is standard personal-finance arithmetic, not a regulated calculation.
Effective date
Not date-sensitive: amortisation arithmetic and the closing-costs-vs-savings comparison are stable methods, not a value that changes on a schedule. Source PDF is dated 9/2020 and remains the CFPB's current published consumer guidance on this topic as of 2026-09-20.
Version
1.1
Last substantive review
2026-09-20
Limitations
  • The break-even formula itself (closing costs divided by monthly savings) is not published by CFPB or any regulator - it is standard arithmetic, not a regulated method, so the source above supports the underlying trade-off the calculator surfaces, not the exact formula.
  • Because Time remaining and New loan term can differ, a refinance that lowers the monthly payment and reports a fast cash-flow break-even can still cost more in total interest once the longer new term is accounted for. Fixed 2026-09-20 (FCH-ISS-22): the page now shows a note directly under the break-even figure whenever the two numbers disagree, explaining which is which, rather than displaying both silently. This is exactly the trade-off the CFPB handout warns about: a lower payment can mean paying more in total.
  • Conversely, shortening the loan term can raise the monthly payment (no cash-flow break-even) while still saving a great deal of total interest - the same contradiction-note now covers this direction too.
  • This is an estimate only, not a Loan Estimate or Closing Disclosure; actual refinance costs, rates and eligibility depend on the lender, credit score and market conditions at the time.

Reference cases

Five worked examples you can check by hand against the formula above.

Reference case 1: $250,000 original loan at 6.5%, 30-year term; $220,000 balance with 25 years remaining; refinancing to 5.5% over a new 30-year term - a standard rate-drop refinance

  • Original loan amount: $250,000
  • Current balance: $220,000
  • Original loan term: 30 years
  • Time remaining: 25 years
  • Current interest rate: 6.5%
  • New interest rate: 5.5%
  • New loan term: 30 years
  • Closing costs: $4,000
  • Extra monthly payment: $0

Result: New payment $1,249.14/mo. Monthly savings $331.03/mo. Cash-flow break-even 13 months to recoup closing costs. Total interest savings -$8,052.16 (costs more) - the shorter 25-year remaining term is being traded for a fresh 30-year term, so total interest rises even though the monthly payment and break-even both look favourable. Since 2026-09-20 (FCH-ISS-22) the page shows a note directly under the break-even figure flagging exactly this: 'This break-even is about monthly cash flow only...'

Reference case 2: $300,000 original loan at 6%, 30-year term; $260,000 balance with 22 years remaining; refinancing to 5.25% over a shorter new 15-year term - the 'shorten the loan, pay more per month' case

  • Original loan amount: $300,000
  • Current balance: $260,000
  • Original loan term: 30 years
  • Time remaining: 22 years
  • Current interest rate: 6%
  • New interest rate: 5.25%
  • New loan term: 15 years
  • Closing costs: $3,500
  • Extra monthly payment: $0

Result: New payment $2,090.08/mo. Monthly savings -$291.43/mo (costs more). Break-even: No cash-flow break-even: the new payment is not lower. Total interest savings $89,147.53 - a large real saving the break-even figure alone never reports, because it only reads the monthly-payment sign. Since 2026-09-20 (FCH-ISS-22) the page shows a note directly under the break-even figure flagging exactly this: 'The new payment is not lower... but the total interest cost below is still lower overall...'

Reference case 3: $200,000 original loan at 5.75%, 30-year term; $180,000 balance with 20 years remaining; refinancing to 5% over a new 30-year term with a $200/month extra payment

  • Original loan amount: $200,000
  • Current balance: $180,000
  • Original loan term: 30 years
  • Time remaining: 20 years
  • Current interest rate: 5.75%
  • New interest rate: 5%
  • New loan term: 30 years
  • Closing costs: $2,500
  • Extra monthly payment: $200

Result: New payment (scheduled, before the extra) $966.28/mo. Monthly savings $200.87/mo. Cash-flow break-even 13 months to recoup closing costs. Total interest savings $11,834.12 - the extra payment shortens the new loan's own payoff to 248 months even though its term is set to 30 years.

Reference case 4: $350,000 original loan at 7%, 30-year term; $300,000 balance with 27 years remaining; refinancing to 6.25% over a new 30-year term with no closing costs entered - the immediate break-even edge case

  • Original loan amount: $350,000
  • Current balance: $300,000
  • Original loan term: 30 years
  • Time remaining: 27 years
  • Current interest rate: 7%
  • New interest rate: 6.25%
  • New loan term: 30 years
  • Closing costs: $0
  • Extra monthly payment: $0

Result: New payment $1,847.15/mo. Monthly savings $481.41/mo. Break-even: Immediate, with no closing costs entered. Total interest savings $3,581.54.

Reference case 5: $250,000 original loan at 3.5%, 30-year term; $230,000 balance with 26 years remaining; refinancing UP to 6.5% over a new 30-year term - the 'refinancing costs more, every way you look at it' edge case

  • Original loan amount: $250,000
  • Current balance: $230,000
  • Original loan term: 30 years
  • Time remaining: 26 years
  • Current interest rate: 3.5%
  • New interest rate: 6.5%
  • New loan term: 30 years
  • Closing costs: $3,000
  • Extra monthly payment: $0

Result: New payment $1,453.76/mo. Monthly savings -$331.14/mo (costs more). Break-even: No cash-flow break-even: the new payment is not lower. Total interest savings -$175,732.16 (costs more). No contradiction here - both figures agree this refinance is worse, so no break-even note is shown.

Change log

DateChange
2026-09-20Card published (T-685). Formula and all five reference-case results verified against finance/mortgage/refinance-calculator/js/refinance-calculator.js by re-implementing its amortisation and schedule-simulation logic independently in Python and computing each output. Found and documented (not fixed, out of scope) that the tool's break-even figure tracks only the sign of the monthly-payment change and can disagree with the total-interest-savings figure in both directions.
2026-09-20FCH-ISS-22 fixed: the break-even label now reads 'Cash-Flow Break-Even' (was 'Break-Even Point (Months)'), its 'no break-even' text now says 'No cash-flow break-even' rather than 'Never', and a note appears directly beneath it whenever the cash-flow and total-interest signals disagree, naming which figure means what. Two new Playwright tests cover both directions of the contradiction; a third confirms the note stays hidden when the two figures agree. Reference cases 1 and 2 updated to describe the note their own scenarios now trigger.

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