Mortgage Refinance Calculator

Refinancing replaces your existing mortgage with a new loan, typically at a lower interest rate. The break-even point — closing costs divided by monthly savings — tells you how many months you need to stay in the home for the refinance to pay off. If you plan to move before then, the closing costs eat your savings.

A general rule of thumb: a refinance is worth considering if the new rate is at least 0.5–1% lower than your current rate AND you'll stay in the home long enough to clear the break-even point. Always compare apples to apples — going from a 30-year loan to a new 30-year loan resets your amortization clock and can mean paying more interest over time even at a lower rate.

Closing costs typically range from 2–5% of the loan amount and include lender fees, appraisal, title insurance, and recording fees. Some lenders offer "no-cost refinance" but build the costs into a slightly higher rate. Compare the total cost over the time you plan to stay in the home.

Beyond rate, consider whether you want to shorten your term (e.g., 30→15 years) to pay off your home faster, or cash out equity for renovations. Each option has different break-even math.

The break-even point on a refinance is the number of months it takes for monthly savings to cover the closing costs. Closing costs on a typical refinance run 2–5% of the loan amount, including origination fees, appraisal, title insurance and recording fees. If you save $200/month and closing costs are $4,800, your break-even is 24 months — refinancing only makes sense if you expect to stay in the home that long.

Cash-out refinancing converts home equity into cash by borrowing more than you owe and pocketing the difference. It is one of the cheapest forms of borrowing because the loan is secured by the home, but it also extends the repayment period and can convert short-term debt (credit cards) into a 30-year obligation. Use cash-out refis for home improvements that add value, debt consolidation when interest savings are large, or emergencies — not for discretionary spending.

Rate-and-term refinancing (lowering your rate or shortening your loan term without taking cash out) is the safer of the two refinance types. Shortening from a 30-year to a 15-year loan typically requires a higher monthly payment but saves tens of thousands in interest and builds equity much faster. Lengthening back to 30 years lowers the monthly payment but resets the amortization clock and can end up costing more in total interest even at a lower rate.

Mortgage rates are correlated with the 10-year Treasury yield, not directly with the Federal Reserve's short-term policy rate. The Fed influences mortgage rates indirectly, but you cannot time a refi based purely on FOMC announcements. A practical rule of thumb is to start watching once your current rate is 0.75–1.0 percentage point above prevailing market rates, then run this calculator monthly until the break-even period drops below your expected time in the home.