Refinance Calculator
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About Refinancing
Refinancing swaps your loan for a new one at today's terms — worth real money when rates have fallen since you borrowed, worth nothing (or less) once fees and a reset clock enter. The old '1% rule' (refi when rates drop a point) is a decent instinct that this calculator replaces with your actual numbers.
Enter the remaining balance, your current P&I payment (the principal-and-interest line, not the escrow-loaded total), the offered rate and term, and the quoted closing costs. You get the savings, the break-even month, and the total-cost line that catches term-reset illusions.
Pricing a brand-new purchase loan instead? That's the Mortgage Calculator
The Break-Even Math
Three steps, one verdict:
New payment = balance × r ÷ (1 − (1+r)⁻ⁿ) Savings = current P&I − new payment Break-even = closing costs ÷ savings (months)
Worked example: $250,000 remaining, currently paying $1,520 — refinanced to 5.5% for 30 years pays $1,419.47, saving $100.53/month; $4,000 of closing costs breaks even in 40 months. Stay 5+ years and it's ~$2,000 ahead; sell in year two and it lost money.
Rate Drop vs Savings
Monthly savings on a $250,000 balance refinanced to 30 years, by new rate (vs a $1,520 current payment):
| New rate | New payment | Monthly savings | Break-even on $4k costs |
|---|---|---|---|
| 6.0% | $1,499 | $21 | 190 months — don't |
| 5.5% | $1,419 | $101 | 40 months |
| 5.0% | $1,342 | $178 | 23 months |
| 4.5% | $1,267 | $253 | 16 months |
The first row is the honest warning: small rate drops produce break-evens longer than most people keep a mortgage — the fee tail wags the rate dog.
When Refinancing Wins (and Loses)
Wins: meaningful rate drops (the table's bottom rows), killing PMI after equity growth, escaping an adjustable rate before it adjusts, and term-SHORTENING refis (25 years left → new 15) that raise the payment but slash lifetime interest. Cash-out refinancing is a different animal — you're borrowing more, and the 'savings' framing doesn't apply.
Loses: refinancing shortly before selling (break-even math is merciless), serial term resets (three refis into fresh 30-year clocks can leave you paying interest for four decades), and 'no-closing-cost' offers that bury the fee in a higher rate — run THAT rate through this calculator and the costs reappear. Match the new term to your remaining years to compare rate against rate honestly.
Frequently Asked Questions
When is refinancing worth it?
When you'll hold the loan well past break-even: closing costs ÷ monthly savings. $4,000 of costs at $150/month savings = 27 months — worthwhile if you'll stay 3+ years, wasteful if a move looms. The rate drop needed varies with balance; big loans justify small drops.
What's the 1% refinance rule?
Old shorthand: refi when rates sit 1%+ below yours. Useful instinct, imprecise tool — on a $400k balance even 0.5% can clear break-even quickly, while on $80k a full point may not. The calculator replaces the rule with your arithmetic.
Why did my payment drop but total cost rise?
Term reset: 25 remaining years refinanced into a fresh 30 spreads the balance thinner AND longer — some 'savings' is just added years of interest. Compare against a new term matching your remaining years to isolate the true rate benefit.
What do refinance closing costs include?
Origination/underwriting fees, appraisal, title work, and recording — commonly 2–5% of the balance. 'No-closing-cost' versions fold them into the rate; the costs exist either way, and this calculator's break-even exposes both packagings.
Should I refinance to a 15-year loan?
If cash flow allows, it's the interest-killer: higher payment, dramatically less lifetime interest, and 15-year rates typically run below 30-year. The break-even framing shifts — you're buying interest savings, not payment relief; run both terms above and compare totals.
Does refinancing hurt my credit?
Briefly and mildly: a hard pull plus a new account dings a few points, recovering within months of on-time payments. Rate-shopping multiple lenders within a short window counts as one inquiry — shop freely inside two weeks.
Methodology. This calculator uses standard financial formulas used across the industry. It is reviewed and maintained by the Vast Calculators editorial team.
Last updated · July 11, 2026
Disclaimer. This tool provides estimates for general informational purposes only and is not a substitute for professional financial advice. Always consult a qualified financial advisor before making decisions about your finances.