Refinance Calculator
New payment, monthly savings & break-even point
Refinancing a $250,000 balance to 5.5% over 30 years, against an $1,800 payment with 22 years left, saves $380.53 a month and recovers $4,000 of closing costs in 11 months. This refinance calculator also shows the number those two hide: what the new loan costs or saves over its whole life. Enter your own balance, payment and rates.
The break-even month every mortgage refinance calculator gives you
The standard test is closing costs divided by monthly saving. Refinance $250,000 at 5.5% over 30 years against an existing $1,800 payment and the new payment is $1,419.47 — a saving of $380.53 a month against $4,000 of costs, so you are square in 11 months.
That is the refinance break even figure, it is correct, and on its own it is one of the most misleading numbers in personal finance.
What the break-even month hides
The break-even test compares two monthly payments. It never asks how long each one lasts. If you have 22 years left and refinance into a fresh 30-year term, you have added eight years of payments — and the total is not close.
Same deal, full picture: $225,200 of interest left on the current loan against $261,010 on the new one. You save $380.53 every month and still pay $39,810 more in total. The break-even said 11 months. The lifetime says never.
This is why the calculator asks for the years remaining on your existing loan. Without that input no tool can tell the difference between a refinance that saves money and one that merely postpones it, and most do not ask.
The new term matters more than the new rate
| New term | New payment | Monthly change | Interest on new loan | Lifetime result |
|---|---|---|---|---|
| 15 years | $2,042.71 | −$242.71 | $117,688 | Saves $103,512 |
| 20 years | $1,719.72 | +$80.28 | $162,732 | Saves $58,468 |
| 22 years | $1,634.62 | +$165.38 | $181,540 | Saves $39,660 |
| 25 years | $1,535.22 | +$264.78 | $210,566 | Saves $10,634 |
| 30 years | $1,419.47 | +$380.53 | $261,010 | Costs $39,810 more |
$250,000 balance, $1,800 current payment with 22 years left, refinancing at 5.5% with $4,000 of costs.
The row that saves the most money has a payment $242.71 higher than today's. The row that saves the most per month is the only one that loses money overall. Matching the new term to the years you have left — the 22-year row — is the cleanest way to compare a rate against a rate rather than a rate against a longer schedule.
How far the rate has to fall to be worth it
The old advice was a one-point drop. With a term reset in play, that is not nearly enough.
| New rate | New payment | Break-even | Over the full life |
|---|---|---|---|
| 3% | $1,054.01 | 6 months | Saves $91,756 |
| 3.5% | $1,122.61 | 6 months | Saves $67,060 |
| 4% | $1,193.54 | 7 months | Saves $41,526 |
| 4.5% | $1,266.71 | 8 months | Saves $15,183 |
| 5% | $1,342.05 | 9 months | Costs $11,939 more |
| 5.5% | $1,419.47 | 11 months | Costs $39,810 more |
| 6% | $1,498.88 | 14 months | Costs $68,395 more |
Refinancing 22 remaining years into a new 30-year term, $4,000 of costs.
Every row breaks even inside 14 months. Only the top four actually save money. The crossover sits between 4.5% and 5% — a drop of well over a point from the roughly 6.4% the existing $1,800 payment implies. Break-even and lifetime cost disagree across half this table, and break-even is the one that flatters the deal.
Rolling the closing costs into the loan
Lenders will happily add the $4,000 to your balance so nothing comes out of pocket. Break-even then reports as immediate, which is technically true and practically misleading: you have borrowed the costs at the mortgage rate for thirty years. On this deal it turns a $39,810 lifetime overspend into $43,986, and shaves the monthly saving to $357.82.
Rolling costs in is a cash-flow decision, not a saving. If the money is available and the emergency fund survives, paying up front is cheaper every time.
When a higher lifetime cost is still the right call
The lifetime number is the honest headline, but it is not the only consideration, and a page that pretended otherwise would be as one-sided as the break-even month. A larger total can be the right trade when:
- Cash flow is the binding constraint. $380 a month of breathing room during a job change, a new child or a business start has value that a thirty-year total does not capture.
- You will genuinely invest the difference. The extra $39,810 is spread across three decades, and money today is worth more than money in 2056. Someone who reliably invests the monthly saving can come out ahead — the operative word being reliably.
- You are removing PMI. If the new appraisal puts you above 20% equity, dropping mortgage insurance is a real monthly saving this calculator does not model.
- You will move first. If you sell in six years, the last twenty-four years of the schedule never happen and only the break-even matters.
- You are consolidating worse debt. Moving a 22% credit-card balance into a 5.5% mortgage lowers the rate dramatically — though it also secures it against your house, which is the trade being made.
The point is not that a longer term is wrong. It is that you should be able to say what it costs before you choose it.
What a refinance comparison cannot include
It compares total payments from today, both retiring the same balance, so the comparison is like for like. It does not discount future money to present value, model taxes or the mortgage interest deduction, include escrowed taxes and insurance, or handle adjustable rates, points bought down at closing, or prepayment penalties on the existing loan. Any of those can move the answer, and a lender's written loan estimate is the only figure to act on.
An estimate, not a lending decision or financial advice. Compare written loan estimates before refinancing.
What the refinance comparison assumes
The new payment is the standard amortised formula on the balance (plus closing costs if rolled in) at the new rate and term. Monthly saving is current payment minus new payment, and break-even is closing costs ÷ monthly saving, rounded up to a whole month. Lifetime cost compares current payment × months remaining against new payment × new months + any up-front costs.
- Both sides retire the same balance, so comparing total payments from today is like for like. This is the comparison the payment-only view cannot make, and it is why the years remaining on the current loan is a required input.
- No present-value discounting. A dollar paid in year 28 is counted the same as a dollar paid next month. That understates the case for a longer term, which is why the guide says so explicitly rather than leaving the number to speak for itself.
- Principal and interest only. Escrowed property tax and insurance are unaffected by a refinance and would cancel on both sides.
- Not modelled: mortgage insurance changes, the interest deduction, discount points, prepayment penalties, adjustable rates, and any cash taken out at closing.
- Closing costs of $4,000 are only a default. Real costs vary widely with lender, loan size and state, and lender credits can offset them in exchange for a higher rate.
Reviewed September 2026.
Figures reviewed . Every worked example on this page is checked against the calculator above.
Refinance Calculator: frequently asked questions
How do I calculate the break-even point on a refinance?
Divide closing costs by the monthly saving. $4,000 of costs against $380.53 a month breaks even in 11 months. It tells you when the costs are recovered — not whether the refinance saves money overall.
Does a lower monthly payment mean I save money?
Not necessarily. Refinancing 22 remaining years into a new 30-year term at 5.5% saves $380.53 a month and still costs $39,810 more in total, because you added eight years of payments.
How much lower does the rate need to be to refinance?
It depends on the term far more than the old one-point rule suggests. Resetting 22 remaining years to a fresh 30 years only starts saving money below about 4.5% to 5% — a drop of well over a point.
Should I refinance into the same term I have left?
It is the cleanest comparison, because it puts rate against rate rather than rate against a longer schedule. On the example loan, matching 22 years saves $39,660 while a fresh 30-year term loses $39,810.
Should I roll the closing costs into the loan?
Only if you need to. It removes the up-front cost but borrows it at the mortgage rate for the full term, turning a $39,810 lifetime overspend into $43,986 on the example deal.
Is refinancing to a shorter term worth the higher payment?
Financially, usually yes. Moving to 15 years raises the payment by $242.71 and saves $103,512 over the life of the loan — the largest saving of any option shown, and the only one that costs more each month.
When is a longer term the right choice anyway?
When cash flow matters more than the total: a job change, a new child, or a plan to move within a few years. It can also make sense if you genuinely invest the monthly difference, since money today is worth more than money in thirty years.
Does this include taxes and insurance?
No. It compares principal and interest only, plus closing costs. Escrowed property tax and insurance are unchanged by a refinance, so leaving them out keeps the comparison clean.