acalculator

Should I refinance my mortgage?

Compare your mortgage today with a new loan, and see how soon the lower payment pays back the closing costs.

Your numbers

An example rate, not today’s rate. Use the rate your lender quotes.
Freddie Mac puts them at about 3% to 6% of the loan.
Pay the closing costs
New monthly payment
$1,847.15

Refinancing $300,000.00 into a 30-year loan at 6.25% changes the payment from $2,162.20 to $1,847.15.

Current monthly payment
$2,162.20
Monthly savingNegative means the new payment is higher
$315.05
Months to break even
20
New loan amount
$300,000.00
Interest left on the current loan
$400,553.29
Interest on the new loan
$364,974.58
Net savingNegative means refinancing costs more over the life of the loans
$29,578.71
New loan paid off in
September 2056
Months
360

Answer for the example date Wednesday, September 30, 2026. It changes to today's date when the page loads.

New monthly payment: $1,847.15. Refinancing $300,000.00 into a 30-year loan at 6.25% changes the payment from $2,162.20 to $1,847.15.

How do the two balances fall?

Where does each year of new payments go?

What does every new payment look like?

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Compares the current mortgage with a new fixed-rate loan: the new payment, the monthly saving, the months to earn back the closing costs, and the interest saved over both loans.

Example with the default inputs (Balance today $300,000.00, Current interest rate 7.5%, Months left to pay 324, New interest rate 6.25%, New loan term (years) 30, Closing costs $6,000.00, Pay the closing costs In cash, New loan start date September 30, 2026) on the example date Wednesday, September 30, 2026: Refinancing $300,000.00 into a 30-year loan at 6.25% changes the payment from $2,162.20 to $1,847.15.

Method: payment = L × r ÷ (1 − (1 + r)^−n) for each loan; monthly saving = current payment − new payment; break-even = closing costs ÷ monthly saving; net saving = interest left now − new interest − closing costs.

  • Both loans have fixed rates, and interest is charged monthly at the yearly rate ÷ 12.
  • The current payment is the one that repays today’s balance over the months left.
  • Closing costs are paid in cash at closing or added to the new loan; either way they count once in the net saving.
  • Tax, insurance, mortgage insurance, and any prepayment penalty are not included; nothing is rounded between months.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Balance today $300,000.00, Current interest rate 7.5%, Months left to pay 324, New interest rate 6.25%, New loan term (years) 30, Closing costs $6,000.00, Pay the closing costs In cash gives Current monthly payment $2,162.20, New monthly payment $1,847.15, Monthly saving $315.05, Months to break even 20, Interest left on the current loan $400,553.29, Interest on the new loan $364,974.58, Net saving $29,578.71.Source: Freddie Mac, Planning to refinance: break even = the total refinance cost ÷ the monthly saving
  2. Balance today $200,000.00, Current interest rate 6.5%, Months left to pay 300, New interest rate 5.5%, New loan term (years) 15, Closing costs $4,000.00, Pay the closing costs Add to the loan gives New loan amount $204,000.00, Current monthly payment $1,350.41, New monthly payment $1,666.85, Monthly saving -$316.44, Net saving $105,091.25.
  3. Balance today $120,000.00, Current interest rate 0%, Months left to pay 120, New interest rate 0%, New loan term (years) 20, Closing costs $0.00, Pay the closing costs In cash gives Current monthly payment $1,000.00, New monthly payment $500.00, Monthly saving $500.00, Interest left on the current loan $0.00, Interest on the new loan $0.00, Net saving $0.00.

How it works

Write B for today's balance, r₀ for the current yearly rate ÷ 1200, k for the months left, r₁ for the new yearly rate ÷ 1200, n for the new term in months (years × 12), and C for the closing costs.

  1. New loan amount. L = B when the costs are paid in cash, and L = B + C when they are added to the loan.
  2. Payments. Each loan's level payment is amount × rate ÷ (1 − (1 + rate)^−months), or amount ÷ months at 0%. The current payment is P₀ = B × r₀ ÷ (1 − (1 + r₀)^−k), the payment that repays today's balance over the months left. The new payment is P₁ = L × r₁ ÷ (1 − (1 + r₁)^−n).
  3. Monthly saving = P₀ − P₁. It is negative when the new payment is higher.
  4. Break-even months = C ÷ (P₀ − P₁), rounded up to a whole month. It is shown only when the saving and the costs are both more than 0.
  5. Interest. Each loan runs month by month: interest = balance × monthly rate, principal = payment − interest, and the last payment clears the balance. The interest left on the current loan is the sum over its k payments, which equals k × P₀ − B. The new loan's interest is the sum over its n payments, n × P₁ − L.
  6. Net saving = interest left on the current loan − interest on the new loan − C. This is the same as everything you would still pay on the current loan, minus everything you pay on the new loan and in cash at closing.
  7. New loan paid off in (with a start date): the month of the new loan's last payment, n months after the start date (payment k is dated k months after it).

Assumptions

  • Both loans have fixed rates, and interest is charged monthly at the yearly rate ÷ 12.
  • Your current payment is the one that repays today's balance over the months left (principal and interest only).
  • Closing costs are paid at closing, in cash or added to the new loan. There is no prepayment penalty on the current loan.
  • Tax, insurance, and mortgage insurance are not included, and nothing is rounded between months.
  • The default rates and costs are examples, not current market rates.

Worked examples by hand

$300,000 left at 7.5% with 324 months to go, refinanced into 30 years at 6.25%, $6,000 of costs paid in cash. r₀ = 0.075 ÷ 12 = 0.00625 and (1 + r₀)^−324 = 0.132828, so P₀ = 300,000 × 0.00625 ÷ 0.867172 = $2,162.20. r₁ = 0.0625 ÷ 12 = 0.00520833 and (1 + r₁)^−360 = 0.154103, so P₁ = 300,000 × 0.00520833 ÷ 0.845897 = $1,847.15. The saving is $315.05 a month, and 6,000 ÷ 315.05 = 19.04, so you break even in 20 months. Interest left now = 324 × 2,162.20 − 300,000 = $400,553.29; new interest = 360 × 1,847.15 − 300,000 = $364,974.58. The net saving is 400,553.29 − 364,974.58 − 6,000 = $29,578.71.

$200,000 left at 6.5% with 300 months to go, refinanced into 15 years at 5.5%, $4,000 of costs added to the loan. L = $204,000. (1.00541667)^−300 = 0.197777, so P₀ = 200,000 × 0.00541667 ÷ 0.802223 = $1,350.41. (1.00458333)^−180 = 0.439062, so P₁ = 204,000 × 0.00458333 ÷ 0.560938 = $1,666.85. The payment rises by $316.44 (a saving of −$316.44), so there is no break-even month. Interest left now = 300 × 1,350.41 − 200,000 = $205,124.30; new interest = 180 × 1,666.85 − 204,000 = $96,033.04; the net saving is 205,124.30 − 96,033.04 − 4,000 = $105,091.25.

$120,000 at 0% with 120 months left, refinanced into 20 years at 0% with no costs. P₀ = 120,000 ÷ 120 = $1,000, P₁ = 120,000 ÷ 240 = $500, a saving of $500 a month. Both loans charge $0 of interest, so the net saving is $0, and with no costs there is no break-even month.

Other questions people ask

How do I know if refinancing is worth it?

Compare three numbers: the monthly saving, the months to break even on the closing costs, and the net saving over the life of the loans. If you plan to stay in the home longer than the break-even time and the net saving is positive, refinancing usually pays off.

How is the break-even point calculated?

Freddie Mac's rule: divide the total cost of the refinance by the monthly saving. $6,000 of costs and a $315.05 monthly saving give 6,000 ÷ 315.05 = 19.04, so you break even in the 20th month. Freddie Mac notes that this simple rule does not work for a cash-out refinance or a shorter term, so also look at the net saving.

Why can a lower payment still cost more?

A new 30-year loan restarts the clock. If you had 27 years left, you now pay for 30, so the monthly payment falls partly because the loan is longer. The net saving here counts all the interest on both loans and the closing costs, so it shows the full picture.

How much does it cost to refinance?

Freddie Mac says to expect about 3% to 6% of the loan principal, for fees such as the application, appraisal, title, and points. The default here is an example; use the costs on your Loan Estimate.

Should I add the closing costs to the loan?

Adding them means no cash at closing, but you borrow more and pay interest on the costs for the whole loan. Paying in cash keeps the loan smaller. This page counts the costs once either way in the net saving, and the interest on rolled-in costs shows up in the new loan's interest.

Does refinancing to a 15-year loan save money?

Usually a lot of interest, but the payment often goes up. $200,000 with 25 years left at 6.5%, refinanced into 15 years at 5.5%, raises the payment by $316.44 but saves $105,091 over the loans.