Mortgage refinance calculator: will a new loan actually save you money?
A lower rate can make refinancing look like an easy win, but a new loan comes with closing costs and often a new 30-year clock. This calculator compares your current mortgage with a new one, so you can see what you’d save each month, how long it would take for those savings to cover the costs, and whether you’d pay more or less over the full life of the loan.
Mortgage refinance calculator
- Monthly savings
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- New principal and interest
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- Months to recover closing costs
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- Net over the life of both loans
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| Keep current loan | Refinance |
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Compares principal and interest only; property tax and insurance don’t change when you refinance. Total cost counts payments from today plus closing costs paid up front. Assumes fixed rates and no extra payments. Cash-out refinancing, points, and changes to PMI or escrow are not included. Everything here runs in your browser; nothing you enter is stored or sent.
What this calculator can help you understand
- How much your monthly payment could fall with a new rate or term.
- How long it takes to recover closing costs from the monthly savings.
- Whether you’d pay more or less in total over the life of the new loan.
- How a shorter term changes the trade-off.
When it’s useful
- When rates fall below your current rate.
- When your credit has improved since you took out your mortgage.
- When you want to pay off your home sooner with a shorter term.
- When a lender sends you a refinance offer.
Who it’s for
- Homeowners with a fixed-rate mortgage considering a new loan.
- People who plan to stay in their home for several more years.
- Anyone comparing Loan Estimates from different lenders.
What to enter
| Input | What it means | Where to find it |
|---|---|---|
| Remaining balance | What you still owe | Your latest mortgage statement |
| Current rate | Your mortgage’s interest rate | Your statement or loan documents |
| Years left | Time remaining on your current loan | Your statement |
| New rate | The rate you’ve been offered | A lender’s Loan Estimate |
| New term | Years to repay the new loan | The offer |
| Closing costs | Fees to take out the new loan | Total closing costs (section J) on the Loan Estimate |
| How you’d pay closing costs | Up front, or added to the new loan | Your choice |
How to use it
- Enter your current balance, rate and years left.
- Enter the new rate, term and closing costs from your offer.
- Choose whether you’d pay closing costs up front or add them to the loan.
- Read the monthly savings and the months to recover the costs.
- Check the net over the life of both loans, then try a shorter term.
Understanding your results
- Monthly savings is your current principal and interest payment minus the new one.
- Months to recover closing costs = closing costs ÷ monthly savings. If you sell or refinance again before then, you’ll likely lose money.
- Net over the life of both loans compares everything you’d pay from today on the current loan with everything on the new loan, plus closing costs paid up front.
- The table shows each loan’s payment, interest and total cost from today.
A worked example
Suppose you owe $300,000 at 7.5% with 28 years left, and you’re offered 6% on a new 30-year loan with $6,000 in closing costs, paid up front.
- Current payment: $2,138.60 a month in principal and interest.
- New payment: $1,798.65, saving $339.95 a month.
- Recovering the costs: 18 months, about 1 year, 6 months.
- Over the life of the loans: interest from today falls from $418,571 to $347,515, and you’d pay about $65,056 less in total, even with two extra years of payments.
- With costs added to the loan: the payment would be $1,834.62, saving $303.98 a month, and recovering the costs would take 20 months.
- With a 20-year term instead: the payment would be $2,149.29, about the same as today, but total interest would drop to $215,830, about $196,740 less in total.
- A smaller drop: at 7% instead of 6%, you’d save $142.70 a month and need 43 months to recover the costs, and you’d pay about $5,956 more over the life of the loan because of the longer term.
Common mistakes
- Looking only at the monthly payment. A longer term can lower the payment while raising the total cost.
- Ignoring how long you’ll stay. If you move before recovering the closing costs, you lose money.
- Forgetting that rolled-in costs accrue interest.
- Comparing payments that include escrow. Use principal and interest only; taxes and insurance don’t change with a refinance.
- Refinancing repeatedly. Each new loan brings new closing costs.
What to do with your result
- Get Loan Estimates from at least three lenders; the forms are standardized, so they’re easy to compare.
- If you can afford a similar payment, compare a shorter term; it often saves the most.
- If you keep the longer term, consider sending the monthly savings to principal; the mortgage calculator shows the effect of extra payments.
Limitations to keep in mind
The calculator compares principal and interest on fixed-rate loans with no extra payments. It doesn’t include points, cash-out refinancing, changes to PMI or escrow, adjustable rates, or tax effects. Your lender’s Loan Estimate is the authoritative source for your costs. This isn’t financial or lending advice.
Frequently asked questions
How much lower does my rate need to be to refinance?
There’s no single rule. What matters is how quickly the monthly savings cover the closing costs, and whether you’ll stay in the home well beyond that. In our example, a drop from 7.5% to 6% recovers the costs in about 1 year, 6 months.
What are typical refinance closing costs?
Often around 2% to 5% of the loan amount, covering lender fees, appraisal, title insurance and recording fees. Your lender’s Loan Estimate lists them.
Should I add closing costs to the loan?
It avoids paying cash up front, but you’ll pay interest on those costs for the life of the loan, and your monthly savings will be smaller. In our example, adding them raises the new payment to $1,834.62.
Does refinancing restart my loan?
Usually, yes. If you have 28 years left and take a new 30-year loan, you add two years of payments. That can mean paying more in total even at a lower rate. A shorter term avoids this.
What about a no-closing-cost refinance?
The lender covers the costs in exchange for a higher rate. Compare it by entering $0 in closing costs and the higher rate.
Does refinancing hurt my credit?
The lender’s credit check and the new account can lower your score slightly for a short time. Shopping for rates within a short window usually counts as a single inquiry for scoring.
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This calculator gives estimates for illustration, based on the figures you enter and the assumptions described on this page. It isn’t financial, tax or legal advice, an offer, or a guarantee of any outcome.