How this calculator works
Your current loan is amortized over the years you have left; the new loan over its new term, with closing costs added if you roll them in. The monthly difference is your savings, and closing costs divided by that saving is the break-even time. Lifetime savings compare remaining interest on both loans after costs.
Worked example
With the example values below: Monthly savings, $303.71 (break even in 1 yr 8 mos). Change any number above to run your own.
What you enter
| Input | Example |
|---|---|
| Current loan | |
| Remaining balance | $320,000 |
| Current rate | 7.2% |
| Years remaining | 27 yrs |
| New loan | |
| New rate | 6.1% |
| New term | 30 years |
| Closing costs | $6,000 |
| Roll costs into loan? | No |
Reasons to refinance
Each goal changes what counts as a good deal, so decide which one matters most before comparing offers.
- Lower your rate and monthly payment when market rates have dropped.
- Shorten your term, for example from 30 to 15 years, to pay far less interest.
- Switch from an adjustable rate to a fixed rate for predictable payments.
- Remove FHA mortgage insurance by moving to a conventional loan once you have 20% equity.
- Take cash out for renovations or debt consolidation; see the cash-out refinance calculator.
The break-even test
Divide your closing costs by your monthly savings to find how many months it takes to recover them. If refinancing costs $6,000 and lowers your payment by $250, you break even after 24 months. If you'll stay longer than that, the refinance pays off.
Don't stop at the monthly payment. Resetting 25 remaining years onto a new 30-year loan lowers the payment partly by stretching it out, which can raise total interest. The calculator compares remaining interest on both loans so you can see lifetime savings, not just monthly ones.
How much rates need to drop
An old rule said refinancing only made sense if rates fell by 1 to 2 percentage points. With lower-fee lenders, a drop of 0.5 to 0.75 points can work on a large balance, especially if you'll stay for years. On a $300,000 balance, a 0.75-point drop saves roughly $150 a month.
Smaller balances need bigger rate drops, because closing costs don't shrink as much as the savings do.
Refinancing step by step
- Check your credit and home value; equity of 20% or more gets the best pricing.
- Get Loan Estimates from at least three lenders on the same day.
- Compare them in the mortgage comparison calculator.
- Lock your rate and provide documents for underwriting and the appraisal.
- Review your Closing Disclosure and sign; you have a three-day right to cancel on a primary home refinance.
Frequently asked questions
How much does it cost to refinance a mortgage?
Closing costs on a refinance usually run about 2% to 6% of the new loan amount, covering lender fees, appraisal, title and recording. On a $300,000 loan that's roughly $6,000 to $18,000. You can pay them up front or roll them into the new loan.
When does refinancing make sense?
When you expect to keep the loan longer than the break-even time: closing costs divided by your monthly savings. If a refinance saves $250 a month and costs $6,000, you break even after 24 months.
Does refinancing restart my loan term?
Yes, unless you choose a shorter term. Moving 25 years of remaining payments onto a new 30-year loan lowers the payment but can raise total interest, which is why the calculator compares lifetime cost, not just the monthly payment.
How soon can I refinance my mortgage?
A rate-and-term refinance on a conventional loan can often be done right away, though some lenders want six months of payments. Cash-out refinances usually require six to twelve months, and FHA and VA streamline refinances have their own waiting periods.
Does refinancing hurt your credit score?
Slightly and temporarily. The lender's hard inquiry and the new account can lower your score by a few points, and multiple mortgage inquiries within about 14 to 45 days count as one. Scores usually recover within months.
Grow what this calculator projects.
TruthSayer AI sends quantitative stock signals across valuations, earnings and dark-pool activity, each one traded in its own funded account first.
Estimates for planning only, not financial, tax or legal advice. Tax tools use 2026 federal figures (brackets, $16,100 / $32,200 standard deduction, $19,000 gift exclusion, $15M lifetime exemption). Rates shown as defaults are examples; replace them with quotes you actually receive.