A common rule of thumb is to refinance when you can cut your rate by 0.75–1 percentage point and will stay past the break-even point. Restarting a 30-year term lowers the payment but can increase total interest.
How to use the Mortgage Refinance Calculator
- Original mortgage amount
- Current interest rate
- Original term
- Years already paid
- New loan term
- New interest rate
- Mortgage points
- Costs of refinancing
- Cash out (+) or paid in (−)
- Refinancing costs are
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the original mortgage, its rate and term and years paid, then the new term, rate, points, refinancing costs and any cash out.
Tips
- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.
Common mistakes to avoid
- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.
Inputs explained
| Field | What to enter |
|---|---|
| Original mortgage amount | Amount in your currency |
| Current interest rate | In % |
| Original term | In years |
| Years already paid | A number |
| New loan term | In years |
| New interest rate | In % |
| Mortgage points | In % |
| Costs of refinancing | Amount in your currency |
| Cash out (+) or paid in (−) | Amount in your currency |
| Refinancing costs are | Choose one: Paid upfront, Rolled into the new loan |
What each result means
- Current monthly payment = pmt([Current interest rate]÷1200, [Original term]×12, [Original mortgage amount])
- Current balance = max(bal([Original mortgage amount], [Current interest rate]÷1200, [Original term]×12, [Years already paid]×12), 0)
- Cost of refinancing (incl. points) = [Costs of refinancing] + [Current balance]×[Mortgage points]÷100
- New monthly payment = pmt([New interest rate]÷1200, [New loan term]×12, [New loan amount])
- Monthly savings = [Current monthly payment] – [New monthly payment]
- Remaining interest on the current loan = [Current monthly payment]×([Original term] – [Years already paid])×12 – [Current balance]
- Total interest on the new loan = [New monthly payment]×[New loan term]×12 – [New loan amount]
- Lifetime saving (interest − costs) = [Remaining interest on the current loan] – [Total interest on the new loan] – [Cost of refinancing (incl. points)]
Example values
How the main result changes when Original mortgage amount changes and everything else stays at the example values above:
| Original mortgage amount | Monthly savings |
|---|---|
| 175,000 | 142.34 |
| 262,500 | 228.5 |
| 350,000 | 314.66 |
| 437,500 | 400.82 |
| 525,000 | 486.98 |
| 700,000 | 659.3 |
Formula
Current balance = balance after the payments already madeNew loan = current balance + costs (if financed) + cash outMonthly saving = old payment − new paymentBreak-even months = refinancing costs ÷ monthly savingWorked example
Inputs — Original mortgage amount: $350,000; Current interest rate: 7.25 %; Original term: 30 years; Years already paid: 3; New loan term: 30 years; New interest rate: 6 %; Mortgage points: 0.5 %; Costs of refinancing: $5,000; Cash out (+) or paid in (−): $0; Refinancing costs are: Rolled into the new loan.
Results — Current monthly payment = $2,387.62; Current balance = $339,056.71; Cost of refinancing (incl. points) = $6,695.28; New loan amount = $345,751.99; New monthly payment = $2,072.96; Monthly savings = $314.66; Break-even = 21 months; Remaining interest on the current loan = $434,531.19; Total interest on the new loan = $400,512.84; Lifetime saving (interest − costs) = $27,323.07.
Frequently asked questions
When should I refinance?
When the rate drop is large enough to recover costs before you sell – often 0.75–1 percentage point or more.
What does refinancing cost?
Typically 2–5% of the loan in closing costs.
Does refinancing reset my loan?
Yes, unless you choose a shorter term.
What formula does the Mortgage Refinance Calculator use?
Current balance = balance after the payments already made.