Compare the mortgage you have with the offer you received
This mortgage refinance calculator compares two complete loans month by month, so you can test a refinance mortgage offer against the loan you already hold. Describe your current loan in the way that matches your paperwork. Balance + term uses the unpaid principal and the months remaining, and calculates the payment. Balance + payment uses the principal-and-interest payment from your statement exactly as entered and lets the schedule run until the balance is gone, without rounding a term and recomputing a different payment. Original loan takes the original amount, term, rate and months remaining and reconstructs both the payment and today's balance.
The reconstruction assumes a level rate and only scheduled payments. For a $400,000 loan at 6% over 360 months with 300 left, it gives a payment of $2,398.20 and a balance of $372,217.43. If you have made extra or missed payments, or the rate has changed, use the balance from your statement instead. Enter the offer's rate, term and costs, then set how long you expect to keep the new loan.
Have these figures ready before you start: the balance, rate and months remaining from your latest statement; the new rate, term and every cost on the offer you received; and how long you realistically expect to keep the new loan. If your statement mixes principal and interest with escrow, enter only the principal-and-interest part. This refinance home loan calculator never fills in a rate for you, because a quoted rate belongs to a specific borrower, date and lender.
What changes when you refinance?
A refinance replaces the debt you have with a new loan, usually with a fresh term, new costs and sometimes more borrowed money. Three things move together: the payment, the time you remain in debt and the total interest. The Consumer Financial Protection Bureau points out that a longer term can lower the monthly payment while raising the total cost.
With $200,000.00 at 6% and 240 months left, moving to 4.5% for 240 months with $3,000.00 paid upfront lowers the modeled payment from $1,432.86 to $1,265.30 and lifetime interest from $143,886.91 to $103,671.70. Reset the same balance into a much longer term and the payment can fall further while total interest rises, which is why this home refinance calculator reports the debt left as well as the payment.
The decision is therefore never just the payment. A refinance can lower the payment by lowering the rate, by lengthening the term, or by both, and the two have opposite effects on total interest. In the main example the term stays at 240 months, so the lower rate cuts the payment by $167.56 a month and lifetime interest by $40,215.21. Stretching the term would cut the payment further and the interest less, which is why the comparison shows both.
Closing fees, points and financing costs
Enter each cost once. Other costs paid upfront are cash at closing. Other costs added to loan raise the new principal, so you repay them with interest. Points have their own field and a clear choice: paid upfront or added to the loan. The points base is the current balance plus any cash-out, before financed costs and financed points, so the calculation is never circular. The percentage you enter is multiplied by that base, and the quoted rate is entered separately: the calculator does not assume a rate cut per point.
| 1 point + 2,000 other costs | Paid upfront | Added to loan |
|---|---|---|
| Points (1% of balance) | $2,000.00 | $2,000.00 |
| Cash paid at closing | $4,000.00 | $2,000.00 |
| New loan principal | $200,000.00 | $202,000.00 |
| New monthly payment | $1,265.30 | $1,277.95 |
| Financing benefit at month 60 | $10,453.02 | $10,039.84 |
Financing the costs leaves less cash to find at closing, but it is not free: it shows up as a higher balance and extra interest. The CFPB explains how points and lender credits trade fees against rate; enter the combination you are actually offered.
Offers often trade points against rate, and the calculator only takes the costs you enter. A no-closing-cost offer is modeled by entering zero costs and the higher rate you were quoted, while a low-rate offer with points is modeled by entering the points and the lower rate. Compare the two by running each at the same holding period and reading the financing benefit at that month, not the rate alone. Points can look cheap when a loan is kept for many years and costly when it is sold or refinanced early, which is why the holding period matters as much as the rate.
Monthly savings are only one part of the comparison
A lower payment is the first number people see, but the two loans do not finish on the same date and carry different balances. This tool runs both ledgers at the same months: each month interest accrues on the opening balance, the scheduled payment is applied and the last payment only covers what is owed. After 60 months in the main example you would have paid $85,971.73 on the current loan and still owe $169,799.20, against $75,917.93 paid plus $3,000.00 upfront on the new loan and $165,399.98 owed.
Entering your statement payment shows why exact payments matter. A $200,000.00 balance at 6% with a stated payment of $1,500.00 finishes in 221 payments with a smaller final payment, not 240, and its modeled break-even against the same new loan shifts accordingly. The side-by-side table shows total interest, payments and balances, and the lifetime totals are labelled because they are not the same date.
When a refinance changes the end date of the loan, the last payments differ as well. Under a stated payment of $1,500.00, the current loan in the example ends after 221 payments, the last one smaller than the rest. Both ledgers are padded with zero payments after they end, so balances and totals line up month by month and a partial final payment is never counted as a full one.
Cash-flow and debt-adjusted break-even
Two measures are reported. Payment savings, or cash savings when there is no cash-out, are cumulative payments on the current loan minus cumulative payments on the new loan and any upfront costs. The debt-adjusted financing benefit adds the cash-out received and the difference in balances at the same month:
- Payment cash difference(t) = paidcurrent(t) − paidnew(t) − upfront costs. It deliberately excludes cash-out proceeds.
- Financing benefit(t) = cash-out − upfront costs + paidcurrent(t) − paidnew(t) + balcurrent(t) − balnew(t).
- Equivalent audit identity: interest on the current loan − interest on the new loan − upfront costs − financed costs.
In the main example the payment savings recover the $3,000.00 in month 18 and the debt-adjusted figure turns positive in month 13; at month 60 they are $7,053.80 and $11,453.02. A first crossing is not always permanent. Refinancing $200,000.00 with 120 months left into a 30-year loan at 4% gives payment savings from month 3 and a financing benefit from month 10, but the benefit turns negative again in month 100 and is -$8,698.38 at month 120 and -$80,289.81 at month 360. The calculator warns when that happens. With no costs at all, it says there are no fees to recover.
Financing a cost does not remove it. Rolling the $3,000.00 into the new loan instead of paying it upfront removes the upfront cash cost, so payment savings begin in month 1, yet the financing benefit still first turns positive in month 13 and stands at $10,833.25 at month 60 against $11,453.02 when the fee is paid upfront. The difference is the interest on the financed fee. Read the debt-adjusted figure whenever any cost is financed.
Cash-out refinancing: cash received is new debt
Cash-out adds borrowed money to the new principal. It is a funding advance, not a saving, and it has its own tile. Take $200,000.00 at 6% refinanced into 4.5% for 240 months with $25,000.00 of cash-out, 2% points paid upfront on the $225,000.00 base ($4,500.00), $3,000.00 of other upfront costs and $1,000.00 added to the loan. The upfront total is $7,500.00, the new principal $226,000.00, and the payment $1,429.79 against $1,432.86: only $3.07 lower. Net cash at closing is $17,500.00.
At month 60 the payment cash difference is -$7,315.53, so the payments alone never recover the costs within 240 months, while the financing benefit is $581.69 with a first crossing in month 57. Financing the points instead moves the benefit at month 60 to -$347.96 and the crossing to month 63. At 0% interest the neutrality is clear: $120,000.00 refinanced into $132,000.00 after $12,000.00 of cash-out raises the payment from $1,000.00 to $1,100.00, the payment cash difference is -$6,000.00 at month 60 and the financing benefit is $0.00, not a $12,000.00 profit.
Cash-out has a second cost that is easy to miss: it raises the balance that every later payment must repay. In the cash-out example, once both loans have ended the financing benefit settles at $18,237.89, which equals the interest on the current loan minus the interest on the new loan, minus the $7,500.00 paid upfront and the $1,000.00 added to the loan. The $25,000.00 of cash-out itself nets out, because it is repaid as principal. Whether borrowing it is wise is a separate question that only your own circumstances can answer.
How a shorter or longer term changes total interest
Compare loans at the same date, then look at lifetime totals. Moving the main example into a 120-month loan at 4.5% raises the payment to $2,072.77 but cuts lifetime interest from $143,886.91 to $48,732.18. At month 60 the financing benefit is $17,222.83 even though the payment cash difference is -$41,394.36, because the new balance is far lower.
The opposite choice reverses the picture: with 120 months left on the current loan, a 360-month loan at 4% has total payments of $343,739.01 against $266,449.20. A shorter loan shows its savings in the balance, and a longer one shows its cost in interest, so read both the horizon row and the lifetime totals.
To compare terms fairly, read the same month on both loans and then the lifetime totals. In the shorter-term example the financing benefit at month 120, when the new loan has just been repaid, is $49,274.11; in the longer-term example it is -$8,698.38. The sign flips because one path has repaid the debt and the other has not.
Interest rate and estimated annualized borrowing cost
The note rate does not include costs. The annualized estimate solves for the monthly rate at which the new payments have a present value equal to the net amount you receive, which is the balance plus cash-out minus costs paid upfront. Financed costs stay in the principal and the payments, so they raise the estimate. In the main example the 4.50% note rate becomes about 4.68% once the $3,000.00 is counted, and the cash-out example is about 4.95%.
The same logic exposes a financed fee at 0%: refinancing $120,000.00 into $123,000.00 at 0% has a 0.49% annualized cost, because the extra $3,000.00 is repaid without any amount received. It is a nominal estimate under stated assumptions, not a statutory APR, and the tool shows a plain explanation when no positive net amount exists.
Compare the annualized estimate with the quoted rate on every offer. A gap of a few hundredths of a percentage point is normal when costs are small; a wide gap means costs are large relative to the amount received, or that you may hold the loan only briefly. The Loan Estimate you receive reports its own annual percentage rate (see the CFPB's sample Loan Estimate), which can differ from this estimate because it uses different cost definitions. Treat this figure as a planning aid and use the disclosure for the official number.
Refinancing, extra payments or a separate equity loan
Refinancing is one of several ways to change a mortgage. If your rate is acceptable and you simply want to finish sooner, use the mortgage payoff calculator to compare extra payments on your current mortgage. If you want to borrow against your home without replacing the first mortgage, compare a separate home equity loan, which models a single fixed installment loan and capacity at a combined loan-to-value you choose. To keep your rate and term but lower the payment after a lump sum, see the mortgage recast calculator.
For a table of any fixed loan, inspect the loan amortization schedule, and for a general installment loan use the loan payment calculator. The mortgage and real estate calculators page lists the housing tools together.
Match the tool to the goal. Wanting a lower rate points toward a refinance, wanting to finish sooner points toward extra payments, and wanting cash without touching the first mortgage points toward a separate equity loan. Each has its own costs, and none is recommended here.
Assumptions, exclusions and documents to check
This is a fixed-rate comparison of principal and interest. It does not include mortgage insurance changes, escrow transfers, prepaid interest or refunds, tax effects, adjustable rates, lender credits beyond what you enter, daily accrual, extra payments, credit or home-value eligibility, live rates or the return on cash you pay upfront. It does not find or compare current offers. Use the loan estimate and closing disclosure you receive for the real payment and costs, and ask a lender for a quote.
Cash-out recovery in the model does not prove that a refinance suits you; it only shows the cost of borrowing more. The results are scenario arithmetic under the entered terms, not personal advice. The balance, rate and months must come from your own statement, and the offer must come from your own quote. Estimate the full monthly ownership budget for a home loan, including taxes, insurance and PMI.
Before relying on any result, compare it with the Loan Estimate and, later, the Closing Disclosure. Ask your servicer for a payoff statement showing the exact amount owed on a given date, and check an escrow analysis if taxes and insurance may change your payment. Confirm whether the new loan has a prepayment charge and whether the rate is locked, and ask what happens to your current escrow balance.
FAQ
How do I calculate refinance break-even?
Compare upfront and financed costs with the modeled change in payments and remaining debt at the same month; the tool also shows cash-cost recovery separately.
Does a lower payment mean I save money?
Not necessarily. A longer term can lower payments while leaving more debt or increasing lifetime interest.
How are points calculated here?
Each entered percentage point is applied to the existing balance plus cash-out, before financed fees and points; the quoted rate is entered separately.
Is cash-out counted as savings?
No. It is borrowed funding. The financing benefit includes the larger new debt and its interest.
Can I enter my current monthly payment?
Yes. Use principal and interest only; taxes, insurance and escrow are outside this model.
Can savings disappear after a break-even point?
Yes. Different payoff dates can produce a later reversal, which the comparison reports.
Two related checks: Check fee-inclusive loan APR for the new loan's fees, or Estimate HELOC payments if a line of credit is the alternative you are weighing.
For a general project rather than a mortgage refinance, estimate investment recovery time from annual net cash flows. If the new quote omits its note rate, estimate the rate from its payment before comparing refinance scenarios.