Free · Break-even · Lifetime savings

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.

Refinance break-even reality · Freddie Mac PMMS · NAR Profile of Home Buyers and Sellers

Closing costs ~$5k–$7k on a $400k loan · break-even ~28 months at 1pt drop

A 100 bps rate drop on a $400k mortgage saves ~$220/month. With $5,500 typical closing costs, you break even at month 25. If you sell or refi again before that, the deal loses money — and the average homeowner moves every ~13 years per NAR data.

We compute break-even months explicitly and flag it in red if it exceeds your expected tenure — the math most refi calculators won't show you because it kills sales.

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.

Related calculators

Mortgage calculator

Calculate new payment.

Mortgage payoff calculator

Extra payment alternative.

Amortization calculator

Full schedule comparison.

Home loan calculator

Purchase financing.

Methodology, sources, and editorial standards

The refinance calculator on this page uses the same closed-form math published by the U.S. Securities and Exchange Commission's consumer-investor portal at Investor.gov and the Consumer Financial Protection Bureau. Every number you see is generated client-side in your browser — no data is sent to our servers, no account is required, and no personally identifiable information is stored or shared. The calculation assumes constant rates and contributions over the modeled period; real-world returns, fees, and tax treatment vary year to year, and the figures presented are educational projections, not personalized financial advice.

We cite primary data sources directly within the FAQs and snapshot block above. Historical return assumptions are drawn from NYU Stern's historical returns database (Aswath Damodaran) and Robert Shiller's S&P 500 dataset. Inflation comparisons rely on the Bureau of Labor Statistics CPI series. Mortgage and credit-card market data come from Freddie Mac's PMMS and the Federal Reserve's G.19 release, respectively. Where we publish our own multi-scenario research, the dataset is available under a Creative Commons CC-BY 4.0 license at snowballr.io/data.

Snowballr is an independent, ad-supported publication. We do not sell financial products, accept affiliate commissions on bank, brokerage, or loan products, or take payment for editorial placement. Our editorial standards describe how we source, fact-check, and update every calculator and guide. The full master sources index lists every primary reference used across the site, organized by topic. For corrections, updates, or fact-checking inquiries, contact us via the contact page; we typically respond within 24–48 hours.

Important disclaimer: This calculator is provided for educational purposes only. It does not constitute investment, tax, accounting, legal, or financial-planning advice and should not be used as the sole basis for any decision about your money. Compound projections, debt-payoff schedules, and retirement estimates depend on assumptions that will change in real life — investment returns are not guaranteed, market downturns can extend recovery timelines, fees and taxes reduce realized growth, and inflation erodes the real purchasing power of nominal balances. Before making a financial decision based on any number you calculate here, consult a fiduciary financial advisor, a licensed tax professional, or both, as appropriate to your situation. Past performance does not guarantee future results.

Who uses this calculator

The refinance calculator is used by three distinct audiences, each for a different question. New investors and savers use it to answer the foundational "what could this become?" question — they enter conservative monthly amounts and realistic return assumptions to see whether building meaningful wealth on a normal salary is actually possible. The answer, for almost every income level, is yes; the math just requires patience and consistency that intuition resists. Mid-career professionals use the same tool to stress-test their retirement plan against catch-up contributions, late-career raises, and the trade-off between paying down debt and investing in tax-advantaged accounts.

Pre-retirees and recent retirees use the calculator to validate withdrawal sustainability and to model what happens if a market downturn coincides with the start of retirement. Educators, financial coaches, and personal-finance bloggers use Snowballr's calculators in their teaching because every input is visible, every formula is documented, and the year-by-year breakdown lets learners see exactly where compounding pulls ahead of contributions. We support that use case explicitly under our Creative Commons license — you can embed any calculator on your own site using the snippet generator at /widgets and cite Snowballr per the citation guide.

Common assumptions and how to interpret the numbers

The output is only as accurate as the inputs and the assumptions that bridge them to real life. Three categories of assumption deserve the most scrutiny. Returns are nominal unless explicitly labeled real (inflation-adjusted); a seven-percent nominal return is closer to four-percent real, which materially changes long-horizon projections. Inflation itself averaged just under three percent in the U.S. from 1928 through 2024 but ran above five percent in roughly fifteen of those years and below zero in three. Average expense ratios for index funds dropped from roughly one-and-a-half percent in 2000 to under a tenth of a percent today, but actively managed mutual funds still average about half a percent — which translates to a quarter of the final balance lost to fees over a thirty-year horizon at typical contribution rates.

Taxes affect both contributions and withdrawals in ways the headline number does not show. Pre-tax contributions in a traditional 401(k) or IRA receive a deduction today but trigger ordinary income tax on withdrawal. Roth contributions are post-tax today but grow and withdraw tax-free. Taxable brokerage accounts pay tax annually on dividends and at sale on capital gains. If you are comparing projected balances across account types, equalize by reducing pre-tax balances by your expected retirement tax rate and adding back the dividend drag on the taxable account; otherwise the comparison is misleading. Our 401(k) vs Roth IRA comparison walks through this explicitly with worked examples at three tax-bracket scenarios.

For inputs you are uncertain about, run the calculator twice with a high and a low value to see how sensitive the answer is to your assumption. If a two-percent rate change moves the final balance by less than ten percent, the assumption is not very load-bearing. If it moves the balance by forty percent or more, that input dominates the model and deserves the most careful estimation. The single highest-leverage input in almost every compound-interest scenario is time — every additional year compounds geometrically — followed by rate, then contribution, then starting principal in roughly that order.