Refinance Calculator
Refinancing is usually worth it when the interest you save outweighs the closing costs before you move or sell — that tipping point is your break‑even month. Enter your current and new loan to see the monthly savings and break‑even point.
Compare your current loan with a proposed new loan — see your new APR, monthly savings, lifetime savings and exactly when the refinance breaks even. This free mortgage and home loan refinance calculator also handles cash-out refinancing (money out of your equity), points and closing costs. Because your loan-to-value ratio affects the rate you’re offered, it pays to compare a few mortgage refinance quotes before you decide.
Enter your current loan and the new loan you're considering (including points, fees and any cash out), then calculate to compare them side by side.
What is loan refinancing?
Refinancing means taking out a new loan to pay off an existing one, usually to get better terms. It is most common with mortgages, but also applies to car loans, student loans and personal loans. Any collateral tied to the old loan generally transfers to the new one. This calculator focuses on the money side: it compares your current loan with a proposed new loan and tells you whether the switch actually saves you money once the upfront costs are counted.
Common reasons to refinance
- Lower the rate — if rates have fallen or your credit has improved, a lower rate cuts your interest cost.
- Lower the payment — stretching the balance over a longer term reduces the monthly payment (though it can raise total interest).
- Shorten the loan — moving from, say, a 30-year to a 15-year term pays the loan off faster, usually at a lower rate but a higher payment.
- Take cash out — borrow against built-up equity and receive the difference in cash.
- Switch loan type — move from an adjustable rate to a fixed rate (or vice versa) to lock in stability.
- Consolidate debt — roll higher-interest balances into one lower-rate loan with a single payment.
How the APR and break-even work
The quoted interest rate is not the whole story. Because points and fees are paid upfront, you effectively receive less than the loan amount, which makes the true cost — the APR — higher than the headline rate. This calculator solves for that APR so you can compare loans fairly. The break-even point is the month the interest you save on the new loan — added up and set against the upfront cost — finally turns positive. Because the lower rate also pays your balance down faster, this happens sooner than simply dividing the fees by the monthly payment saving. Stay past that point and the refinance is ahead; sell or refinance again before it and you may lose money. The savings chart plots this running total across the whole loan.
Watch the upfront costs
Refinancing a mortgage can carry an application fee, appraisal, origination fee or points, title search, recording and other charges — often adding up to a few thousand dollars. Enter your points and costs & fees so the break-even and lifetime-savings figures reflect the real cost of switching.
Estimates only — not financial advice. Actual rates, fees and terms vary by lender, loan type and location.
The refinance formula
No black box — here is exactly how this refinance calculator works out every figure, using the standard loan-amortization and APR methods so the numbers line up with the mainstream refinance calculators.
The formulas behind this calculator
Your new monthly payment comes from the standard amortization formula:
- M — new monthly payment
- L — new loan amount (current balance + any cash out)
- i — monthly rate = new annual rate ÷ 12
- n — number of payments = new term × 12
If you enter your balance and payment, the months left on the current loan are recovered by inverting that formula:
- B — current balance · P — current payment · r — current monthly rate
Because points and fees are paid upfront, the true cost — the APR — solves for the rate q where the money you actually receive equals the present value of the new payments:
- upfront — L × (points ÷ 100) + costs & fees
- APR — q × 12 · one point = 1% of the new loan
Then the comparison: monthly savings = old payment − new payment; the break-even is the first month your cumulative interest saved passes the upfront cost; and lifetime savings = current total cost − (new total cost + upfront − cash out).
In a spreadsheet the payment is =PMT(rate/12, term*12, -loan). These are the same amortization and APR methods every standard refinance calculator uses.
How to use it & key terms
Enter your current loan and the new rate and term, add the closing costs, then press Calculate for your new payment, monthly saving and break-even month.
| Term | What it means |
|---|---|
| Refinance | Replacing your existing loan with a new one, usually for a lower rate. |
| Break-even point | How long the monthly saving takes to repay the closing costs. |
| Closing costs | Upfront fees to set up the new loan. |
| Cash-out refinance | Borrowing more than you owe and taking the difference in cash. |
| Rate-and-term | A refinance that changes only the rate and/or term, not the balance. |
| Total interest saved | The lifetime interest difference between your old and new loans. |
Sources & methodology
We rebuild your current loan (from either the remaining balance and payment, or the original amount and time paid) and amortize the proposed new loan, including any cash out. The new loan's APR is solved so the loan amount minus upfront points and fees equals the present value of the new payments. The break-even point is the month your cumulative interest saved first offsets the upfront cost, and the savings-over-time chart plots that running total across the whole loan — climbing as the lower rate saves interest, with any later decline if the new term runs longer and adds extra interest.
Sources: Standard loan amortization formula; standard APR / annual-percentage-rate method (net proceeds vs payment stream); cumulative interest saved versus the upfront cost for the break-even and the savings-over-time chart. Each point equals 1% of the new loan amount.
The reset-term trap and "no-cost" refinances
A lower interest rate is only half of a refinance. The other half is the term, and it quietly decides whether you actually come out ahead. When you refinance a loan you have been paying for years into a fresh 30-year mortgage, you restart the amortization clock: the early years of the new loan are once again mostly interest, and stretching the remaining balance over a longer period can raise total interest even though the rate is lower. A smaller monthly payment can therefore mask a larger lifetime cost.
There are two clean ways to avoid the trap. The first is to refinance into a shorter term that matches or beats the time left on your current loan — for example, moving from a partly paid 30-year into a new 15-year — so the lower rate does its job without adding years. The second is to take the new lower rate but keep paying the old, higher amount, sending the difference to principal. That way the reduced rate becomes pure acceleration rather than an excuse to slow the payoff. The calculator above lets you compare terms directly so the total-interest effect is visible, not hidden.
It is also worth separating two goals lenders lump together. A rate-and-term refinance changes only your rate or schedule and keeps the balance roughly the same; a cash-out refinance deliberately increases the balance to hand you equity as cash. They behave very differently, and mixing them up is an easy way to talk yourself into borrowing more than you meant to. Then there are no-cost refinances, which are never truly free: instead of paying closing costs at the table, you accept a slightly higher rate, or the fees are rolled into the balance. That can be sensible if you might move or refinance again before the higher rate outweighs the saved upfront cash, but over a long hold, paying costs upfront for the lowest rate usually wins.
If your only aim is a lower payment and you are happy with your current rate, a refinance may be the wrong tool entirely: a mortgage recast can reduce the payment while keeping your rate, with far less paperwork. Weigh the break-even, the term and the true cost together before you sign.
Frequently asked questions
What is loan refinancing?
Taking out a new loan, usually on better terms, to pay off an existing one — most often to lower the rate, change the term, switch loan types, or take cash out of equity.
What is the break-even point when refinancing?
The month the interest you save on the new loan finally offsets the upfront cost of refinancing. Because the lower rate also pays your balance down faster, it arrives sooner than just dividing the fees by the monthly payment saving. Stay past it and the refinance pays off; the savings-over-time chart shows the whole trajectory.
How do points and fees affect the APR?
They're paid upfront, so you effectively receive less than the loan amount. Spreading that cost across the payments makes the true annual cost (APR) higher than the quoted rate.
What is a cash-out refinance?
Replacing your loan with a larger one and taking the difference in cash from your equity. It raises the balance you owe, so weigh the extra interest against the cash.
When is refinancing worth it?
Usually when the new APR is meaningfully lower and you'll keep the loan past the break-even point, so lifetime savings beat the upfront cost.
Does a longer term cost more overall?
Often yes — a longer term lowers the monthly payment but can raise total interest, even at a lower rate. The comparison table shows total interest for both.
How does my loan-to-value ratio affect a refinance?
Your loan-to-value ratio is the loan balance divided by the home’s value. More equity (a lower LTV) usually earns a better rate, and dropping below 80% can remove mortgage insurance. Most lenders want an LTV of 80% or less for the best conventional refinance terms.
How do I get the best refinance rate?
Compare quotes from several lenders on the same day, since rates move daily, and look at the APR rather than the headline rate so fees are included. Improving your credit score and lowering your loan-to-value ratio also help. Enter each offer’s rate, term and costs here to see the real monthly and lifetime savings.
Does refinancing restart your loan?
It can. A refinance replaces your old loan with a brand-new one, so the amortization clock resets to the new term. If you're 8 years into a 30-year mortgage and refinance into another 30-year loan, you stretch the payoff back out to 30 years — and can pay more total interest even at a lower rate. To avoid that, refinance into a shorter term (15 or 20 years) and compare the total interest in the results.
How long does a refinance take?
A typical mortgage refinance takes about 30 to 45 days from application to closing — covering the appraisal, underwriting and final paperwork. It can be quicker with a streamline refinance, or slower if the appraisal or your documents are delayed.