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Refinance calculator
See whether refinancing makes sense. Calculate the monthly payment drop, break-even point on closing costs, and total lifetime interest saved at a new rate.
When refinancing makes sense
- Rate drop of 0.75–1%+: standard rule of thumb when closing costs are ~$3–6k
- Switching ARM to fixed: lock in certainty before rate resets
- Removing PMI: if you've crossed 20% equity, refinance to drop PMI ($100–300/month savings)
- Cash-out refi: tap equity for renovations, debt payoff, college — only if the new blended rate is still attractive
- Term shortening: 30-year → 15-year cuts total interest by ~60%
Break-even formula
Break-even months = Closing costs ÷ Monthly savings If you sell or move before break-even, refinancing loses money on net.
Example: $5,000 closing costs, $200/month savings = 25 months break-even. Plan to stay 5+ years and the refi pays off easily. Plan to move in 2 years and it doesn't.
Refinance savings example
$300k mortgage at 7% → refinance to 6% with $4,500 closing. Old payment: $1,996/mo. New payment: $1,799/mo. Monthly savings: $197. Break-even: 23 months. Lifetime interest saved over remaining 30 years: ~$71,000. Worth it if staying 3+ years.
Refinance Calculator FAQ
What rate drop justifies refinancing?
Generally 0.75–1.0% with standard $3–6k closing costs. For larger balances, even 0.5% can work. For smaller balances ($150k or less), aim for 1.0–1.25% drop to make the closing costs worthwhile.
What does a refinance cost?
Closing costs typically 2–5% of loan amount. Includes: appraisal ($500–700), origination ($1–2k), title insurance ($1–3k), recording fees ($200), credit report ($50). 'No-closing-cost refi' rolls these into a higher rate — costs you more long-term.
Refinance vs HELOC for cash?
HELOC keeps your current low mortgage rate and only borrows at higher HELOC rates for the cash portion. Cash-out refi resets your entire loan at the new rate. If your current rate is below market (3–4%), use HELOC. If your current rate is at/above market, cash-out refi is cheaper.
Will refinancing restart my mortgage clock?
By default yes — a 30-year refi resets the clock to 30 years from today. To keep your original payoff date, refinance into a shorter term (e.g., year 7 of 30 → refinance into 23-year term). Many lenders offer non-standard term loans for this.
How does refinancing affect taxes?
Mortgage interest deduction continues to apply (if you itemize). Closing costs are typically not deductible in the refi year (except discount points, amortized over the loan term). Cash-out refi: deduction only applies to the portion used for substantial home improvement.
Can I refinance multiple times?
Yes — many lenders require waiting 6 months between refis (the 'seasoning' requirement). Otherwise unlimited. Each refi has new closing costs, so it only makes sense if you're saving meaningful money each time.