Mortgage Refinance Calculator

Last updated: August 4, 2026 · Data sources: CFPB, Freddie Mac Primary Mortgage Market Survey, Fannie Mae. Rates shown in examples reflect 2026 market averages and are for education only.

How This Refinance Calculator Works

This mortgage refinance calculator compares your existing loan against a proposed new loan to show whether refinancing makes financial sense. It runs the standard US amortization formula for both the current and new loan, then calculates the difference in monthly payment, total interest, and net savings after closing costs.

Monthly Payment Calculation

The calculator uses the standard US mortgage amortization formula to compute monthly payments for both your current and potential new mortgage:

Where M is the monthly payment, P is the principal (loan amount), r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments (loan term in years times 12).

Break-Even Analysis

The break-even period is calculated by dividing the total closing costs by the monthly savings from refinancing:

For example, if your closing costs are $4,800 and your monthly savings are $150, your break-even is 32 months. If you plan to stay in the home longer than 32 months, refinancing pays for itself. If you might sell sooner, the costs outweigh the savings.

That is the simple version. A more thorough break-even analysis also factors in the difference in loan balance at the point you expect to sell. When you refinance into a new 30-year term, you restart the amortization clock — early payments go mostly to interest again, so your principal balance drops more slowly at first. If you sell within the first few years, you may owe more on the new loan than you would have on the old one, which can push the true break-even out by a few months. The calculator above approximates this by netting closing costs against total interest savings, which is the figure most homeowners care about.

Total Interest Savings

Total interest savings are calculated by comparing the total interest that would be paid over the remaining term of the current mortgage versus the total interest that would be paid over the term of the new mortgage. This figure does not include closing costs — that is what the net savings calculation is for.

Net Savings Calculation

The net savings figure accounts for the closing costs associated with refinancing: Net Savings = Total Interest Savings - Closing Costs. This is the true bottom-line number that tells you how much money refinancing puts in your pocket over the life of the new loan.

When to Refinance Your Mortgage

Refinancing makes the most sense in a few specific situations. The most common is when interest rates have dropped since you took out your original loan — even a 0.5% reduction can save tens of thousands of dollars over a 30-year term. Another strong reason is switching from an adjustable-rate mortgage to a fixed-rate loan before rates rise further.

Some homeowners refinance to shorten their loan term, moving from a 30-year to a 15-year mortgage to pay off the home faster and save on interest. Others use a cash-out refinance to tap home equity for major expenses like home improvements or debt consolidation, though this increases the loan balance and should be approached carefully.

The key question is always the break-even: how long will it take for the monthly savings to recover the closing costs? If you expect to sell or move before the break-even point, refinancing may not be worth it even at a lower rate. Use the calculator above to test your specific numbers before talking to a lender.

Signs It Is the Right Time

A few signals line up when refinancing is clearly worth a look. Rates have dropped at least 0.5% to 0.75% below your current rate. You plan to stay in the home for at least another three to five years. Your credit score has improved since you bought, which could unlock a better rate tier. You have built up 20% equity and can finally drop PMI. Or you want to switch from an ARM that is about to adjust into a predictable fixed payment.

On the flip side, hold off if you might move within 12 to 24 months, if your current loan has a prepayment penalty that eats the savings, or if your home value has dropped enough that you owe close to or more than the home is worth. In that last case, look into government streamline programs like FHA IRRRL or VA IRRRL before paying for an appraisal.

Refinance Closing Costs Explained

Closing costs typically range from 2% to 5% of the loan amount and may include application fees, appraisal fees, title insurance, origination fees, and other charges. These costs are paid upfront when refinancing. Some lenders offer a no-closing-cost refinance, but they typically charge a higher interest rate to compensate.

Here is what makes up a typical refinance closing cost stack on a $300,000 loan:

• Origination / lender fees: $0 to $1,500 (many lenders now waive these to compete)
• Appraisal: $500 to $800 (sometimes waived on streamline refinances)
• Title search and insurance: $700 to $2,000, depending on state and loan size
• Recording fees: $50 to $300 paid to your county
• Prepaid escrow: 2 to 6 months of property taxes and insurance, held in reserve
• Discount points: optional, each point costs 1% of the loan and lowers the rate by roughly 0.25%

The prepaid escrow is not really a cost — it is money that ends up back in your pocket when your old escrow account is refunded. But you do need the cash on hand at closing, so plan for it. Discount points only make sense if you will hold the loan long enough for the lower payment to recoup the upfront cost — basically a break-even calculation inside your break-even calculation.

Refinance Closing Costs Breakdown Table

Here is a side-by-side look at what each fee covers and the typical range on a $300,000 refinance. Your actual numbers will vary by state, lender, and loan size, but this is the bucket most borrowers fall into.

Add it all up and a $300,000 refinance typically lands between $6,000 and $9,000 in true closing costs, plus the prepaid escrow you get back later. Ask for the Loan Estimate within three days of applying — it lines out every fee in writing so you can compare lenders apples to apples.

Cash-Out Refinance vs Rate-and-Term Refinance

Refinances come in two flavors, and picking the right one depends on what you are trying to accomplish.

Rate-and-Term Refinance

A rate-and-term refinance replaces your current loan with a new one at a better rate, a different term, or both. The loan balance stays roughly the same — you are not pulling cash out. This is the classic "lower my payment" or "shorten my term" move, and it is what most people picture when they hear "refinance." Conventional rate-and-term refinances allow up to 95% loan-to-value, and the interest stays fully deductible on up to $750,000 of acquisition debt for married couples filing jointly.

Cash-Out Refinance

A cash-out refinance replaces your existing mortgage with a larger loan and gives you the difference in cash. You typically need at least 20% equity left after the new loan, and most conventional cash-out programs cap the new loan at 80% of your home value. VA cash-out refinances go up to 90% to 100% in some cases. Used well, a cash-out refinance is one of the cheapest ways to borrow a large sum — the interest rate on a first mortgage is usually far below what you would pay on a credit card, personal loan, or second mortgage. Common smart uses include:

• Paying off high-interest credit card or student loan debt
• Funding home improvements that raise the property value (kitchen, bath, additions)
• Covering major life events like college tuition or medical bills
• Buying out an ex-spouse in a divorce settlement

Side-by-Side Comparison

The catch with cash-out: you are converting unsecured debt into debt secured by your home. If you cannot make the new payment, you risk foreclosure. You also restart the amortization clock, so a chunk of your early payments go to interest again. Under the 2017 tax law, interest on cash pulled out for anything other than buying, building, or substantially improving the home is no longer deductible — talk to a CPA before assuming any deduction.

Pick rate-and-term if your priority is lowering your payment or shortening your term and you do not need cash. Pick cash-out if you have a clear, high-value use for the equity — especially if it replaces debt at a higher rate. Run the new payment through the mortgage affordability calculator to confirm it still fits the 28/36 rule before you pull the trigger, or use the refinance break-even calculator to double-check how long it takes to recoup the costs.

2026 Refinance Rates Trend

Through the first half of 2026, the 30-year fixed mortgage rate has hovered in the low-to-mid 6% range, down from the 7% plus levels seen in 2023 and 2024, according to Freddie Mac's Primary Mortgage Market Survey. The 15-year fixed has tracked about 0.5% below the 30-year. That has put refinancing back on the table for millions of homeowners who took out loans in 2022 through 2024 at rates above 7%.

For borrowers sitting on a 7.5% rate, dropping to 6.25% on a $300,000 balance lowers the monthly payment by roughly $260. Even after $6,000 in closing costs, the break-even lands around 23 months. That is a strong case for refinancing if you plan to stay put.

A few things to watch for the rest of 2026. The Federal Reserve's rate decisions, inflation prints, and the labor market all pull mortgage rates in different directions. Forecasters generally expect rates to drift modestly lower or stay flat rather than spike, but no one can promise a specific number. The practical move: if the math works at today's rate, do not wait for a better one that may never arrive. You can always refinance again later if rates drop further.

One more 2026-specific note: with home values holding up in most markets, many homeowners have more equity than they realize. That opens the door to dropping PMI, switching from FHA to conventional to eliminate mortgage insurance for good, or doing a cash-out refinance at a competitive first-mortgage rate. Check your estimated home value on a site like your county assessor's portal before you assume you do not have enough equity. If you are comparing refinance options, review current average mortgage rates, check the latest FHA loan limits, and use the refinancing break-even calculator before applying.

Refinance Calculator Example

Say you have a $240,000 loan balance at 7% interest with 25 years remaining. You are offered a new 30-year loan at 6% with $5,000 in closing costs. The calculator shows your new monthly payment drops from approximately $1,597 to $1,439, saving $158 per month. The break-even is $5,000 / $158 = 32 months. If you stay in the home for more than 32 months, you come out ahead. Over the full 30 years, the total interest savings could reach $51,000 or more, depending on how much principal remains.

Try the same scenario with a 15-year new term instead of 30 years. The monthly payment will be higher, but the total interest savings will be dramatically larger. Use the mortgage affordability calculator to check whether the new payment fits your budget before committing. If you only care about the break-even question, the dedicated refinance break-even calculator is a faster tool. And if you are still weighing whether owning beats renting in your market, the rent vs buy calculator lays out the full cost comparison. Curious where rates stand right now? Check our average mortgage rate tracker for the latest 30-year, 15-year, and ARM benchmarks.