Mortgage Refinance Calculator
Current loan versus proposed refinance
Compare payment, break-even, balances, and lifetime cost
Result
Calculation summary
Enter values to see the result
Live refinance preview
Net savings over the selected holding period
- Current principal, interest, and entered MI
- $2,072.73
- New principal, interest, and entered MI
- $1,750.72
- Result after 5 years
- $7,632.07
How to use this calculator
- 1Enter the current principal balance, fixed annual rate, exact remaining term, and any monthly mortgage insurance.
- 2Enter the proposed fixed rate and term, then itemize lender fees, third-party fees, discount points, lender credits, cost treatment, and any cash-out amount.
- 3Choose how long you expect to keep the refinanced loan and review monthly payment, exact modeled break-even, horizon net savings, balances, interest, LTV, and lifetime cost.
Formula
Horizon net savings = keep-current equivalent cost − refinance equivalent cost
Each equivalent cost combines payments made, mortgage insurance, and remaining principal at the selected horizon. The refinance side also includes cash-paid costs and subtracts cash received, while financed costs remain in the new balance.
Calculation steps
- Calculate the current loan payment from its outstanding principal, fixed rate, and exact remaining months.
- Calculate point cost on the current payoff balance plus cash-out, subtract lender credits, and either pay the net costs in cash or add them to the new principal.
- Amortize both fixed-rate loans month by month and stop principal, interest, and entered mortgage insurance after payoff.
- At every month, compare cumulative payments, mortgage insurance, upfront cash, cash received, and the remaining loan balances.
- Identify the first month when refinance net savings reaches zero and report net savings at the selected holding horizon.
- Separately compare remaining lifetime interest and mortgage insurance with the new loan’s interest, insurance, and closing costs.
Worked example
A 300,000 balance with 25 years left at 6.75% is compared with a 30-year loan at 5.75% and 6,000 of closing costs. The model shows the lower initial payment but also measures when the cost is recovered and whether resetting the term raises lifetime cost.
Assumptions
- Both loans use one fixed nominal annual rate divided into monthly periods with level principal-and-interest payments.
- The entered current balance is treated as the payoff principal; accrued interest, prepaids, escrow adjustments, penalties, and timing differences are excluded.
- Discount points are calculated as a percentage of the current payoff balance plus cash-out before financed closing costs.
- Entered monthly mortgage insurance remains constant until the corresponding loan is paid off; eligibility and cancellation are not inferred.
- Property tax, homeowners insurance, HOA dues, utilities, maintenance, and home value changes are excluded from savings because they are assumed unchanged by the refinance.
- Tax deductions, opportunity cost of cash, adjustable rates, recasting, extra payments, and lender-specific APR disclosures are excluded.
Sources
Frequently asked questions
Why can a lower payment still cost more?
A longer new term can spread payments over more months. The initial payment may fall while total future interest, mortgage insurance, and closing costs rise.
How is break-even calculated?
The tool simulates each month and finds the first point where the refinance path’s payments, insurance, remaining balance, and net upfront cash no longer exceed the equivalent keep-current cost.
What happens when closing costs are financed?
The net closing costs are added to the new principal. Cash required at closing becomes zero in this model, but the new payment, remaining balance, and interest reflect the larger loan.
How is cash-out handled?
Cash-out increases the new principal and is also treated as cash received. This prevents the borrowed cash itself from being counted as a loss while still capturing its interest and balance effects.
Why are property tax and homeowners insurance excluded?
Those property costs generally continue whether you keep or refinance the mortgage. Entered mortgage insurance is included because it can differ between loan scenarios.
Does the result include APR or a lender quote?
No. It uses the fixed rates and itemized costs you enter and is not an APR disclosure, payoff statement, Loan Estimate, approval, or offer.
Are my mortgage figures placed in a shared link?
No. The calculator keeps loan balances, rates, costs, home value, and cash-out inputs out of the URL and shares only the canonical page plus a result summary.