Find out if refinancing your mortgage makes financial sense
About this calculator
This calculator answers the core refinance question: given your closing costs, new interest rate, and how long you plan to stay in your home, does refinancing put you ahead? Enter your current loan balance, rate, and remaining term alongside the new loan terms to see your monthly savings, the month you break even, and your net benefit over your stay horizon — after accounting for both the closing costs and what those dollars could have earned if invested instead.
Not financial advice. This tool is for informational purposes only. It does not constitute financial, mortgage, tax, or legal advice. Consult a qualified professional before making any real estate or financial decisions.
HOW LONG DO YOU PLAN TO STAY?
7years
1 yr15 yrs
The break-even and net benefit figures update based on your expected stay.
Current Loan
Your existing mortgage details
$
Principal still owed — check your latest statement
%
yrs
Years left on your current loan
$
Your current monthly PMI — counted as additional monthly savings
New Loan
Proposed refinance terms
%
2%10%
Use the interest rate, not APR
pts
Each point = 1% of loan balance, typically reduces your rate by ~0.125–0.25%.
$
Origination, title, appraisal, recording
$
Taxes, insurance & prepaid interest (escrow)
$
Cannot exceed your lender closing costs (prepaids cannot be rolled)
Rolling lender fees into the new loan removes the upfront payment but increases your balance — and the interest on it. Prepaid escrow costs cannot be financed.
%
Used to calculate opportunity cost of closing costs
Break-Even Analysis
Results update instantly as you adjust your inputs
MONTHLY SAVINGS
—
P&I difference
BREAK-EVEN
—
to recoup closing costs
NET BENEFIT
—
after costs & opp. cost
INTEREST SAVED
—
over full loan life
ℹ
Calculating…
Adjust your inputs above to see your refinance verdict.
The savings chart doesn't apply here — your monthly payment increases, but your total interest paid falls significantly. See the Interest Saved and Lifetime Savings tiles above for the economic picture.
● Cumulative savings- - Closing costs- - Your stay horizon
PAYMENT COMPARISON
Current monthly P&I—
PMI savings (per your input)—
New monthly P&I—
Monthly difference—
NET BENEFIT OVER YOUR STAY
Gross payment savings—
Lender closing costs—
Discount points—
Rolled into new balance—
Prepaid costs (escrow & taxes)—
Opportunity cost of closing costs—
Net benefit—
Key Concepts & How It Works
The math behind each field, what the chart shows, and the assumptions built into this model
How the Calculations Work
Monthly Payment Formula
Both the current and new monthly payments are computed using the standard amortization formula: P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan balance, r is the monthly rate (annual rate ÷ 12), and n is the number of monthly payments (term in years × 12). This gives the fixed principal-and-interest payment that fully amortizes the loan over its term. Taxes, insurance, and HOA are not included — the calculation focuses on the P&I change that refinancing produces.
Monthly Savings
Monthly savings = (current P&I payment + monthly PMI) − new P&I payment. If you're eliminating PMI through the refinance (e.g., your home has appreciated to 20%+ equity), enter your current PMI amount and it's added to the saving. If PMI isn't a factor, leave it at $0. The new payment is computed on the new loan balance — which may be higher than your current balance if you rolled closing costs in.
Out-of-Pocket Costs & Rolling
Out-of-pocket = lender fees + discount points + prepaid costs − rolled amount. Lender fees (origination, title, appraisal) can be rolled into the new loan balance, removing the upfront cash requirement but increasing the balance and the monthly payment. Discount points and prepaid costs (taxes, insurance, prepaid interest) are always out-of-pocket — they cannot be financed. The rolled amount is capped at your lender fees; it cannot exceed them.
Break-Even
Break-even in months = out-of-pocket costs ÷ monthly savings. This is the number of months you need to stay in the home (with the new loan) before cumulative savings exceed what you paid to refinance. If you sell or refinance again before this point, you'll have spent more than you saved. The break-even is simple by design — it doesn't account for opportunity cost or the time value of money, which is why the Net Benefit metric exists alongside it.
Net Benefit & Opportunity Cost
Net benefit = total payment savings over your stay − out-of-pocket costs − opportunity cost. Payment savings is your monthly P&I reduction × the number of months in your stay horizon. Opportunity cost is what your closing costs could have grown to if invested instead — calculated as: out-of-pocket × ((1 + r)^years − 1), where r is your expected annual investment return. Refinancing makes financial sense when total payment savings exceed both the direct costs and the foregone investment growth on that cash.
Interest Saved
Total interest on each loan is computed by summing all payments over the full term and subtracting the principal. For the current loan, the calculation runs from the remaining balance over the remaining term. For the new loan, it runs from the new loan balance (post-roll) over the full new term. Interest saved = total interest current − total interest new. Note that extending your term (e.g., resetting to 30 years) can reduce monthly payments while increasing total interest paid — the interest saved figure can sometimes be negative in those cases, which is reflected accurately.
Discount Points
One discount point = 1% of the loan balance, paid at closing. Points buy a lower interest rate — typically 0.125–0.25% per point, though the exact reduction varies by lender and market conditions. The point cost is added to your out-of-pocket costs (not rollable) and is shown separately in the cost breakdown. Because points reduce your rate, they simultaneously reduce monthly payments and increase monthly savings — so the net effect on break-even depends on how much the rate drops versus how much you paid for it.
The Cumulative Savings Chart
The chart plots two lines over time: cumulative monthly savings (rising linearly from zero) and out-of-pocket costs (a flat line representing cash already spent). The point where they cross is your break-even. After that, the gap between the lines is your running net savings — before opportunity cost. A third dashed line shows cumulative savings net of opportunity cost: what you'd have in your pocket after accounting for what the closing costs could have earned if invested instead. This line grows more slowly, and its long-run value is your true economic gain from refinancing.
Assumptions & Limitations
Rate vs. APR
This calculator uses the interest rate (note rate) — not the APR. The note rate is what determines your monthly payment via the amortization formula. APR is a disclosure metric that incorporates certain lender fees into an annualized cost of borrowing; it's useful for comparing loan offers but is not the right input for payment math. Always enter the rate from your Loan Estimate, not the APR box adjacent to it.
Taxes & Insurance Not Modeled
Property taxes, homeowner's insurance, and HOA dues are not included in the payment comparison. These costs are typically the same regardless of whether you refinance, so they don't affect the savings calculation. Prepaid costs at closing (tax reserves, insurance reserves, prepaid interest) are captured in the Prepaid Costs field — these are the escrow amounts you fund at closing, not your ongoing monthly escrow payment.
Stay Horizon
Net benefit is calculated over the stay horizon you set with the slider. This is the single biggest variable: a refinance that looks marginal at 3 years can look compelling at 7. The break-even point is horizon-independent (it's just cost ÷ monthly savings), but net benefit, opportunity cost, and interest saved all depend on how long you stay. If you're unsure, enable "I don't know" to see a 10-year benchmark estimate, then use the slider to stress-test shorter horizons.
Term Extension Effect
Resetting from, say, 22 years remaining on your current loan to a new 30-year term lowers your monthly payment but extends the payoff date by 8 years — adding years of interest payments that wouldn't otherwise exist. The calculator flags whether your term is shortened or extended and by how much. In some scenarios, a shorter new term (15 or 20 years) produces higher monthly savings and substantially less total interest, even at a lower rate, because the loan pays off faster.