Is lowering the rate enough to justify a refinance?
Not by itself. A lower rate can still be a bad trade if closing costs are high, you expect to move soon, or the new term resets the balance so slowly that the long-term savings disappear.
Refinance Calculator
Decide whether refinancing helps payment, lowers cost, or accelerates payoff
Current loan
Start with the mortgage you already have, including any existing PMI.
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Proposed refinance
Compare rate, term, closing costs, and whether you want to finance the fees.
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yrs
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Finance closing costs
Roll fees into the new balance instead of paying them in cash.
Decision setup
Tell the tool what matters most and how long you expect to keep the home.
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Cost focus
This refinance lowers expected financing cost
Based on your stay horizon, the new loan reduces interest and fees without leaving you with a larger balance at the comparison point.
Monthly increase
$95
Break-even
No break-even
Current payment
$2,745
Includes taxes, insurance, HOA, PMI
New payment
$2,840
Fees paid in cash
Horizon net savings
$21,646
84 months compared
Cash due at close
$6,500
Paid upfront
Keep current loan
All-in monthly payment$2,745
Cost over stay horizon$145,971
Ending balance$283,272
Current LTV74.4%
Refinance scenario
All-in monthly payment$2,840
Cost over stay horizon$124,326
Ending balance$247,183
Estimated LTV / PMI74.4% / No PMI
Term options
Hold the rate constant and compare how different terms change payment, break-even, and horizon savings.
Selected term: 20 years
| Term | New payment | Monthly savings | Break-even | Horizon net |
|---|---|---|---|---|
| 15 years | $3,249 | -$504 | No break-even | $29,665 |
| 20 years | $2,840 | -$95 | No break-even | $21,646 |
| 30 years | $2,463 | $282 | 2 years | $14,265 |
Decision notes
- -At your stay horizon, the refinance leaves you with a lower remaining balance than the current loan.
Comparison summary
Balance difference at horizon$36,089
Stay horizon7 years
Estimated PMI on new loanNone
About This Tool
Refinance analysis
Check whether a lower rate offsets the cost of refinancing
Compare your current mortgage with a proposed refinance to estimate monthly savings, closing-cost recovery, and overall fit.
Typical Use
1-2 minutes
Best For
Deciding if a refinance is worth it before requesting formal quotes
Main Output
Break-even timeline and projected payment change
Built Around
Standard mortgage math and planning assumptions
What to prepare
- Current balance, current rate, current payment, and proposed new rate
- New loan term and estimated refinance closing costs
What you get back
- Monthly savings estimate and break-even point
- A cleaner view of whether lower payments justify upfront fees
Why trust this view
- Focuses on the core refinance question: when savings catch up to costs
- Useful for rate-and-term comparisons before you talk to lenders
- Actual offers can vary based on credit profile, fees, and loan structure
Source notes and methodology details are available on our references page.
Break-Even PointClosing CostsRate Comparison
Industry-Standard Calculations
Our calculations follow the Truth in Lending Act (TILA) guidelines and use standard financial formulas employed by major lending institutions.
Monthly Payment Calculation
M = P[r(1+r)^n]/[(1+r)^n-1]Where M = monthly payment, P = principal loan amount, r = monthly interest rate, n = number of payments
Amortization Schedule
Standard declining balance methodEach payment is split between interest (calculated on remaining balance) and principal reduction
APR Estimation
Includes interest + fees over loan termAnnual Percentage Rate calculations include all financing charges as required by Truth in Lending Act (TILA)
About MortgageCalcMaster
Content is published under the MortgageCalcMaster editorial team workflow, currently led by the site operator, reviewed against public mortgage and consumer-finance sources, and updated when assumptions, formulas, or product behavior materially change.
Last reviewed: March 2026. All calculators and guides are intended for education and planning. They do not replace lender disclosures or advice from licensed professionals. Learn more about our editorial process
How to Use Refinance Calculator
1
Enter your current balance, rate, years remaining, home value, and any existing PMI payment.
2
Model the proposed refinance with the new rate, term, estimated closing costs, and whether those costs are financed into the loan.
3
Set your expected years in the home so the tool compares the two paths over a realistic hold period.
4
Choose whether your goal is lower payment, lower financing cost, or faster payoff.
5
Review the recommendation, break-even timing, and ending balance difference instead of relying only on monthly savings.
6
Use the term-options table to see whether a shorter or longer refinance term fits your real objective better.
Key Terms Explained
- Break-Even Point
- The time it takes for monthly savings to offset refinance closing costs.
- Stay Horizon
- How long you expect to keep the home or loan before selling, moving, or refinancing again.
- Horizon Net Savings
- The estimated financing-cost difference between keeping the current loan and refinancing over your selected stay horizon.
- LTV Ratio
- Loan-to-value ratio, or loan balance divided by home value.
- PMI
- Private mortgage insurance that may apply when the refinance leaves the loan above an 80% loan-to-value ratio.
- Term Reset
- Starting a new amortization schedule that can lower the payment but slow down principal payoff.
Pro Tips
- A refinance that lowers the payment is not automatically cheaper over time if it adds years back onto the loan.
- Shorter-term refinances often improve equity position even when they do not maximize monthly savings.
- If you might move soon, focus on break-even timing and cash due at closing before chasing a slightly lower rate.
- Ask lenders for the full fee worksheet so you can replace rough closing-cost estimates with real numbers.
Important Note
This calculator provides estimates based on standard formulas. Actual loan terms may vary based on your credit score, lender policies, and market conditions. Always consult with a qualified mortgage professional before making financial decisions.
Related Guides
Use these guides to decide whether the refinance improves payment, cost, or PMI strategy.
Guide
Mortgage Refinancing Guide
Understand break-even, term reset, and stay-horizon tradeoffs before you refinance.
Guide
PMI Removal Guide
Compare refinancing against extra principal if PMI is part of the decision.
Guide
How Mortgage Interest Works
See why a lower rate does not always mean lower total financing cost.
FAQ
Refinance Calculator FAQ
These answers explain the assumptions behind the calculator so users can interpret the output with the right context.
Why does the stay horizon matter so much?
Because refinance costs are paid upfront or rolled into the new balance today, while the benefit arrives over time. If you sell or move before the break-even point or before the cost savings accumulate, the refinance can underperform.
When should I finance closing costs into the new loan?
Financing costs can preserve cash, but it raises the new balance and means you pay interest on those fees. It usually makes more sense when liquidity matters more than minimizing long-run borrowing cost.