Loan refinance calculator to decide whether refinancing your mortgage or installment loan is worthwhile, with savings and break-even analysis.
Four tabs: refinance savings (vs. closing cost), break-even point (when refi pays for itself), cash-out refinance (tap home equity), and term-vs-rate comparison to pick the best option.
Disclaimer: US refinance closing cost is typically 2-5% of loan amount. Confirm exact fees and terms with your lender.
Calculator information
📋 How to use this calculator
- Enter your current loan principal balance ($), existing interest rate (% per year), and remaining term (months).
- Fill in the new refinance offer: new rate (% per year) and new term (months).
- Enter total closing costs: origination fee (typically 1% of principal), title, appraisal, and any prepayment penalty.
- Choose whether to keep the same term or extend/shorten it; the calculator will show total interest saved.
- Open the break-even tab to see in which month the monthly savings cover the closing costs.
- For a cash-out refinance, enter the cash amount you want to take out and the current appraised home value.
- Compare term vs rate options in the final tab to decide whether shortening the term or lowering the payment is more advantageous.
🧮 Refinance Net Savings and Break-even
Monthly_Savings = Old_Payment - New_Payment; Break_even = Closing_cost / Monthly_Savings
- Payment = P x [i(1+i)^n] / [(1+i)^n - 1] (monthly amortization)
- P = remaining loan principal
- i = monthly interest rate (annual / 12)
- n = term in months
- Closing_cost = origination + title + appraisal + prepayment penalty
Refinancing is worthwhile if the break-even is < 50% of the remaining term and you plan to keep the property beyond the break-even point. Rates should drop at least 0.75-1% to realistically cover the costs.
💡 Worked example: Refinance a $320,000 mortgage from 7.5% to 5.5%
Given:- Principal balance: $320,000
- Old rate: 7.5% APR
- Remaining term: 180 months (15 years)
- New rate: 5.5% APR
- Closing cost: $6,400 (2% of principal)
Steps:- Old payment: i=0.00625; 320000 x 0.00625 x (1.00625)^180 / [(1.00625)^180 - 1] = $2,966/month.
- New payment: i=0.00458; 320000 x 0.00458 x (1.00458)^180 / [(1.00458)^180 - 1] = $2,614/month.
- Monthly savings: 2,966 - 2,614 = $352.
- Break-even: 6,400 / 352 = 18.2 months.
- Total savings over 15 years: 352 x 180 - 6,400 = $56,960.
Result: Refinancing is WORTHWHILE. Break-even is only ~18 months, and total interest savings are about $57,000 over 15 years. Make sure you do not sell the home within the first ~2 years after refinancing.
❓ Frequently asked questions
When is the best time to refinance a mortgage?
Refinancing is optimal when: (1) the rate gap between old and new is >=1%, (2) the remaining term is still >5 years, (3) your credit score has improved compared with when you first took the mortgage, and (4) you plan to keep the home for >2 more years. Avoid refinancing if the prepayment penalty is high (some loans charge 1-3% of principal during the first 3 years).
What is a cash-out refinance?
A cash-out refinance is a refinancing in which you take out a new loan larger than the old balance, receiving the difference in cash. For example, with a $200K balance and a $400K appraisal, taking a new $300K loan nets $100K in cash. Maximum LTV is usually 70-80%. Rates are typically 0.25-0.5% higher than a standard rate-and-term refinance because the risk to the lender is greater.
Can refinancing increase the total interest you pay?
Yes, if the term is extended. For example, refinancing a remaining 10-year loan into a 20-year loan lowers the monthly payment, but total interest can be higher because you are borrowing for longer. The fix: refinance with the same term or shorter; the payment still drops because of the lower rate, and total interest falls as well.
Can you refinance while delinquent?
It is nearly impossible. The refinance lender will pull your credit report and any payment more than 90 days past due is a near-automatic denial. Clear the delinquency first, maintain on-time payments for 6-12 months, then apply. Alternative: ask your existing servicer about loan modification rather than refinancing.
Are there hidden costs in a refinance?
Yes. Beyond the rate, watch for: (1) origination fee 0.5-1% of principal, (2) appraisal fee $400-700, (3) title and attorney fees 0.5-1% of loan value, (4) homeowners and (where required) PMI premiums that must be re-bound, (5) prepayment penalties on the old loan of 1-3%, (6) credit report and recording fees. Total typically runs 2-4% of the new loan principal.
📚 Sources & references
Last updated: May 11, 2026