Mortgage Refinance Calculator — Break-Even & Total Savings
Compare your current mortgage with a refinance. Estimate monthly savings, remaining interest, closing-cost break-even time, and total lifetime savings.
Mortgage refinance rate comparison example
Example: $300,000 balance, 25 years remaining, current rate 7.00%, new 25-year term, and $6,000 in closing costs. Values are rounded estimates.
| New rate | New monthly payment | Monthly savings | Break-even | Lifetime savings |
|---|---|---|---|---|
| 6.50% | $2,026 | $95 | 64 months | $22,415 |
| 6.00% | $1,933 | $187 | 33 months | $50,230 |
| 5.50% | $1,842 | $278 | 22 months | $77,423 |
Tips for comparing a refinance
- Compare the annual percentage rate and the full fee disclosure, not only the advertised interest rate. Discount points and lender credits can materially change the break-even date.
- Use the time you realistically expect to keep the property or loan. A refinance that saves money over 25 years can still lose money if you sell or refinance again before closing costs are recovered.
- Keep the new term close to the years remaining when you want a fair total-cost comparison. Resetting a 20-year balance to 30 years often lowers the payment while increasing lifetime interest.
- Run several rate and fee combinations. A slightly higher no-cost rate may beat a lower rate with expensive points when your expected holding period is short.
Mortgage refinance questions
Why a lower mortgage payment does not always mean a cheaper loan
A refinance replaces the remaining balance of an existing mortgage with a new loan. The new payment depends on both the rate and the newly selected term. Lowering the rate reduces interest, but stretching the balance over more months can reduce the payment even when the borrower ultimately pays more. That is why this calculator presents monthly cash flow and lifetime cost separately.
Closing costs create a second trade-off. The simple break-even period divides upfront costs by monthly savings and estimates how long it takes for the monthly benefit to repay those costs. It is a useful first screen, but it does not include the investment return that the upfront cash might otherwise earn, tax effects, or the possibility of selling the home.
The most useful comparison keeps the same balance and tests several combinations of rate, term, and fees. If one option has a lower total cost within the time you expect to keep the loan, it may be financially attractive. The final decision should still use the lender's official disclosure because APR, escrow, mortgage insurance, and prepayment rules vary by product and country.