Refinance Calculator

Enter the outstanding balance, your current rate, the rate the new lender offers, the remaining term and the closing costs (origination fee, appraisal, title and recording). The calculator shows the net saving and how long the lower payment takes to recover the costs.

How to use the refinance calculator

1. Outstanding loan balance: the principal you owe now. Your monthly statement shows it, or ask your servicer for a payoff figure.
2. Current interest rate: the note rate on the loan you have.
3. New lender rate: the rate on the Loan Estimate from the new lender, without points unless you are paying for them in the closing costs.
4. Remaining term: the years left on your current loan. The calculator assumes the new loan runs for the same number of years.
5. Fees and other charges: the total closing costs on the Loan Estimate, sections A to C plus recording fees in section E. Leave out prepaid interest, escrow deposits and homeowners insurance, which you would pay either way.

The result shows the net saving after costs, both monthly payments, the monthly difference and the number of months it takes to earn back the costs.

How the saving is worked out

The calculator works out the payment on the balance at your current rate and at the new rate, both over the remaining term. The difference is your monthly saving. Multiplied by the number of months left, it gives the gross saving. Subtracting the closing costs gives the net saving. The break-even point is the closing costs divided by the monthly saving.

Example: $300,000 left at 7.5% with 15 years to go, refinanced at 6.5%.

• Current payment: about $2,781
• New payment: about $2,613
• Monthly saving: about $168
• Gross saving over 15 years: about $30,189

What happens next depends on the closing costs:

Closing costs	Net saving	Break-even
$1,500	$28,689	9 months
$6,000	$24,189	36 months
$9,000	$21,189	54 months

Closing costs on a US mortgage refinance usually run 2% to 5% of the loan, so on $300,000 expect $6,000 to $15,000 unless the lender is covering some of them. The default of $1,500 in the calculator is low for a mortgage and closer to a small loan or a streamlined refinance. Enter the figure from your actual Loan Estimate.

When a refinance pays off

Three things decide it:

• The rate gap. A one-point drop is a common rule of thumb, but on a large balance with many years left, a smaller drop can still pay. At 7.0% to 6.5% on the same loan, the monthly saving is only about $83 and $9,000 of costs takes about nine years to earn back.
• The time left. The saving builds up month by month, so the longer the loan has to run, the more there is to save. With only 5 years left on $300,000, going from 7.5% to 6.5% with $9,000 in costs loses about $500.
• How long you will keep the loan. If you might sell or refinance again before the break-even month, you lose money on the deal. If you plan to stay ten years, a longer break-even is fine.

The 30-year reset trap

Lenders often quote a new 30-year loan, which makes the payment look much lower. On the example above, a new 30-year loan at 6.5% has a payment of about $1,896, which is $885 less than you pay now. But you would pay about $382,600 in interest over 30 years, against about $200,600 if you kept your current 15 years at 7.5%. The lower payment comes from stretching the loan, not from the lower rate.

That is why this calculator keeps the remaining term the same: it isolates what the rate change is worth. If you do take a longer term for cash-flow reasons, you can still pay the old amount each month, which pays the new loan off on roughly your original schedule while keeping the lower minimum as a safety net. The extra payment calculator shows what those extra amounts save.

Points and no-closing-cost offers

• Discount points lower the rate in exchange for an upfront fee, usually 1% of the loan per point. Add the cost of points to the fees, and use the lower rate. Points pay off only if you keep the loan beyond the break-even month.
• No-closing-cost refinances roll the costs into a higher rate or add them to the balance. If the costs go into the rate, enter that higher rate and $0 in fees. If they go into the balance, enter them as fees and allow for the interest they will collect.
• Lender credits work the opposite way to points: a slightly higher rate in return for the lender paying some of your costs. Run both versions and compare the net saving over the years you expect to keep the loan.

Cash-out refinancing

A cash-out refinance replaces your loan with a larger one and pays you the difference. This calculator is not built for that, because the new balance is different from the old one. To compare, work out the payment on the new, larger amount with the loan payment calculator and compare it with your current payment plus the payment on whatever you would otherwise borrow the cash with, such as a home equity loan or personal loan.

Other things to check before you apply

• Your credit score. The best rates go to scores above roughly 740, and a lower score can wipe out the rate gap.
• Your home’s value. Lenders cap the new loan by loan-to-value ratio. If the value has risen, you may also be able to drop PMI by refinancing.
• Prepayment penalty on the current loan. Rare on modern mortgages, but check.
• Rate locks. Rates move daily. Ask how long the lock lasts and what an extension costs.
• Recasting instead. If you have a lump sum, a recast of your current loan may lower the payment for a fee of a few hundred dollars, with no new loan.

How long a refinance takes

Most mortgage refinances close in 30 to 45 days. You apply, the lender orders an appraisal and title search, an underwriter checks your income and assets, and you sign at closing. On a refinance of your main home, federal law gives you a three-business-day right to cancel after signing, so the money is paid out on the fourth business day. Your old loan is paid off at that point, and your first payment on the new loan is usually due about a month and a half later. During that gap you skip one payment, but the interest is not forgiven. It is collected as prepaid interest at closing or included in the payoff of the old loan.

Plan the timing around your current payment. If a payment is due during the process, make it. Missing it would show up on your credit report and could cost you the new rate.

Use the amortization schedule to find your balance at the expected closing date, which is the figure to enter here.

All the math runs in your browser, and nothing you enter is stored or shared.

Learn more

How mortgage refinancing works explains the process and documents. Is refinancing worth it? looks at the break-even and the traps.

Frequently asked questions

How much does it cost to refinance a mortgage?

Typically 2% to 5% of the loan amount, covering the origination fee, appraisal, title insurance, recording fees and other charges. On a $300,000 loan, that is about $6,000 to $15,000. Some lenders offer to cover costs in exchange for a higher rate. Compare offers using the Loan Estimate, which every lender must give you within three business days of applying.

How many points does the rate need to drop to make refinancing worth it?

There is no fixed number. A one-point drop is a common rule of thumb, but the answer depends on the balance, the years left and the closing costs. On a large loan with 20 years left, half a point can pay. On a small loan near the end, a full point may not. The break-even figure here answers it for your numbers.

What is a refinance break-even point?

It is the number of months it takes for the lower payment to add up to the closing costs. With $6,000 in costs and a $168 monthly saving, it is 36 months. If you keep the loan longer than that, you come out ahead. If you sell or refinance before then, the refinance cost you money.

Does refinancing hurt my credit score?

A little, briefly. The lender’s hard credit inquiry and the new account can lower your score by a few points for a few months. Rate shopping with several lenders within about two weeks to 45 days, depending on the scoring model, counts as a single inquiry. Paying the new loan on time rebuilds the score.

Can I refinance with the same lender?

Yes, and your current lender may offer lower fees to keep you. Still, get at least two other quotes on the same day. Lenders price differently, and an outside offer is useful when you ask your current lender to match it. Some lenders also offer a streamlined refinance for existing customers with less paperwork.

Should I include closing costs that are rolled into the loan?

Yes. Enter them in the fees box as if you paid them at closing. The calculator then treats them as an upfront cost, which slightly understates the real cost, because financed costs also collect interest for the rest of the loan. On $6,000 at 6.5% over 15 years, that interest is roughly $3,400, so add it to the fees for a stricter comparison.