🏠 Mortgage Refinance Calculator
Compare your current loan to a new refinanced loan — see monthly savings, break-even point, and total lifetime interest saved.
How the Mortgage Refinance Calculator Works
This calculator compares your existing mortgage to a proposed refinanced loan side by side. Enter your current loan balance, interest rate, and remaining term in months, then enter the new rate and term you've been quoted. The calculator instantly computes both monthly payments, the total interest you'll pay over each loan's remaining life, your monthly savings, and — critically — the break-even point: how many months before the accumulated savings exceed what you paid in closing costs.
The year-by-year amortization comparison shows exactly how the two loan balances diverge over time, helping you visualize whether you'll still be in the home long enough to benefit. Both out-of-pocket and rolled-in closing cost scenarios are supported.
What Is the Break-Even Point and Why Does It Matter?
The break-even point is the single most important number in any refinance decision. It tells you how long you need to stay in your home before the refinance pays for itself. If closing costs are $6,000 and your new loan saves $250/month, your break-even is 24 months (2 years). If you plan to sell or move within that window, the refinance costs you money — even if the new rate is lower. If you plan to stay 5, 10, or 20 more years, you could save tens of thousands in interest.
A useful rule of thumb: if break-even is under 24 months, refinancing is almost always worth it. Between 24–48 months, consider your housing plans carefully. Over 48 months (4 years), refinancing is typically only worthwhile if you're highly confident you'll stay put.
When Does Mortgage Refinancing Make Financial Sense?
Refinancing makes the most sense when several conditions align: your new interest rate is at least 0.5–1.0 percentage points lower than your current rate; you plan to stay in the home long enough to pass the break-even point; your credit score has improved since the original loan (enabling better rate offers); your home value has appreciated (giving you more equity and potentially eliminating PMI); and your financial situation has stabilized (lenders want to see steady income and low debt-to-income ratio).
Refinancing may not make sense if you're already deep into your loan's amortization schedule — the early years of a mortgage are heavily front-loaded with interest, so if you've been paying for 20 years and refinance into a new 30-year loan, you reset that interest front-loading and could pay significantly more total interest even at a lower rate. This calculator's lifetime interest comparison shows this clearly.
Rate-and-Term vs. Cash-Out Refinancing
This calculator focuses on rate-and-term refinancing — replacing your existing loan with a new one at a lower rate and/or different term, without changing the loan balance (except for rolled-in closing costs). The goal is to reduce monthly payments, shorten the loan term, or both.
Cash-out refinancing works differently: you borrow more than your current balance and take the difference as cash, typically for home improvements, debt consolidation, college tuition, or other large expenses. Cash-out refis have higher rates than rate-and-term refis and increase your loan balance, so they require a different analysis — compare the cash-out rate to what you'd pay for a personal loan, home equity loan, or HELOC, then weigh that against the impact on your equity and monthly payment.
Mortgage Refinance Closing Costs: What to Expect
Refinance closing costs typically run 2–5% of the loan balance — on a $300,000 refinance, expect $6,000–$15,000 in costs. Line items include: loan origination fee (0.5–1% of loan), appraisal fee ($300–$600), title search and title insurance ($700–$1,500), attorney or settlement fees ($500–$1,000), recording fees ($25–$250), prepaid interest (days 1–30 of the new loan), and homeowners insurance and property tax escrow setup. Some lenders offer "no-closing-cost" refinances — these roll costs into the loan balance or slightly increase the rate. The net effect is a higher rate or larger balance, which this calculator models via the "roll closing costs into loan" option.
How to Get the Best Refinance Rate in 2026
Mortgage refinance rates in 2026 remain elevated compared to the historically low rates of 2020–2021. To get the best available rate: improve your credit score to 740+ before applying (the difference between a 680 and 760 score can be 0.5–0.75% in rate); increase your home equity to 20%+ (sub-20% equity triggers PMI or worse rates); reduce your debt-to-income (DTI) ratio below 43% ideally; shop at least 3–5 lenders including banks, credit unions, and online mortgage lenders; lock your rate when you find a favorable offer; and time your application — rates fluctuate with Treasury yields and Federal Reserve policy.
Getting multiple quotes within a 14-45 day window counts as a single credit inquiry for scoring purposes (FICO mortgage shopping window), so rate shopping does not meaningfully hurt your credit score.
Shortening Your Loan Term: 30-Year to 15-Year Refinance
One of the most powerful refinancing strategies is shortening your loan term. A 15-year mortgage typically carries a rate 0.5–0.75% lower than a 30-year mortgage, and you pay interest for half as long. The tradeoff is a higher monthly payment. For example, refinancing a $280,000 balance from a 30-year at 6.75% ($1,815/month) to a 15-year at 6.0% ($2,363/month) costs $548 more per month but saves approximately $180,000 in total interest over the life of the loans. This calculator's comparison table shows the total cost difference clearly — input your remaining balance and compare a 30-year new loan vs a 15-year new loan to see your specific numbers.
Tax Deductibility of Mortgage Interest After Refinancing
Mortgage interest on refinanced loans remains deductible on federal taxes (for itemizers) subject to the same $750,000 loan balance cap that applies to original purchase mortgages under the 2017 Tax Cuts and Jobs Act. Closing costs on a refinance are generally not deductible in the year paid — they must be amortized over the life of the loan. Points paid to reduce the rate on a refinance are also deductible but must be spread over the loan term (unlike purchase mortgage points, which can be deducted in year one). Consult a tax professional for your specific situation, especially if you're doing a cash-out refinance where proceeds go toward non-home-improvement purposes.
People Also Ask
Refinance closing costs typically run 2–5% of the loan amount. On a $300,000 loan, that's $6,000–$15,000. Key costs include origination fees, appraisal, title insurance, and prepaid items. No-closing-cost refinances exist but shift costs into a higher rate or larger balance. Always factor closing costs into your break-even calculation — a lower rate with high closing costs may take years to pay off.
The old "1% rule" (only refinance if you can drop the rate by at least 1%) is outdated. The actual threshold depends on your loan balance and how long you'll stay. On a large balance ($400,000+), even a 0.375% rate drop can break even in under 2 years. On a small balance ($150,000), you might need a 1.5%+ drop to justify $6,000 in closing costs. Always run the specific numbers rather than relying on rules of thumb.
Refinancing causes a small, temporary dip in your credit score (typically 5–15 points) due to the hard inquiry and new account opening. This effect fades within 6–12 months. If you rate-shop with multiple lenders within a 14–45 day window, all mortgage inquiries count as a single inquiry for FICO scoring. The long-term credit impact of refinancing is neutral to positive — lower monthly payments improve debt utilization and on-time payment history.
Yes, but with limitations. FHA streamline refinances allow refinancing with as little as 3.5% equity if you already have an FHA loan. Conventional loans typically require 5% equity to refinance, though below 20% equity usually means paying PMI (private mortgage insurance) on the new loan. VA streamline refinances (IRRRL) have no equity requirement for eligible veterans. If your equity is below 20%, factor in PMI cost when evaluating whether the refinance makes financial sense.
Most mortgage refinances take 30–60 days from application to closing. The timeline includes: application and document submission (1–3 days), loan processing and underwriting (2–4 weeks), appraisal scheduling and completion (1–2 weeks), final approval and closing disclosure (3 business days required before closing), and closing day. You have a 3-day right of rescission after signing — the funds don't disburse until this period passes. Working with an experienced lender and having all documents ready can shorten the process to 3–4 weeks.