Why does a lower rate sometimes not save me money?

If the new loan resets to a longer term, or the closing costs are high relative to your monthly savings, the break-even point can stretch out far enough that refinancing isn't worth it unless you'll stay in the home a long time.

Does this account for a cash-out refinance?

No — this assumes you're refinancing the same balance you currently owe. A cash-out refinance (borrowing more than your current balance) would need a larger new-loan amount entered as the balance instead.

Is a shorter new term always better?

Not necessarily for monthly cash flow — a shorter term usually means a higher monthly payment even at a lower rate, though it also means less total interest and a faster payoff. Try both a 30-year and a shorter new term to compare.

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Finance

Mortgage Refinance Calculator

Break-even point and monthly savings from refinancing.

🔒 Runs entirely in your browser — nothing here is ever uploaded

Last reviewed 2026-08-25

About the Mortgage Refinance Calculator

Calculates whether refinancing your mortgage is worth it — your break-even point (how many months until the closing costs pay for themselves in lower payments) and your monthly savings.

How to use it

Enter your Current loan balance, Current interest rate, and the years remaining on your current loan.
Enter the New interest rate and New loan term you're being offered.
Enter the Refinance closing costs.
Read your break-even point and monthly savings in the result panel.

Formula

Break-even point (months) = total closing costs ÷ monthly savings
Monthly savings = current monthly payment − new monthly payment

Both monthly payments use the standard fixed-rate amortizing-loan formula. If refinancing doesn't actually lower your payment, there's no break-even point to calculate — the calculator reports that plainly rather than showing a nonsensical negative number.

Worked example

A $320,000 balance with 27 years remaining at 7%, refinanced to 6% over a new 30-year term with $6,000 in closing costs, breaks even in about 22 months — refinancing is worth it if you plan to stay in the home longer than that.

Recommendations

• If you don't plan to stay in the home past the break-even point, refinancing likely isn't worth the closing costs, even at a lower rate.
• Resetting to a new 30-year term extends how long you'll pay interest overall, even if the monthly payment drops — compare total interest, not just the monthly number, if that matters to you.
• Closing costs commonly run 3%–6% of the loan balance — get a real Loan Estimate from your lender rather than guessing.

Frequently asked questions

Lender fees (origination, application), title search and insurance, appraisal, and other third-party fees — typically 3%–6% of the loan balance. Your lender's Loan Estimate will show the real figure for your specific refinance.