Mortgage Refinance Calculator

A cheaper payment is not automatically a cheaper loan

“Refinance calculator” is the search after a rate drop, a 3-year ARM reset, or a lender mailer. The mailer shows a new payment. It does not show how many years they put back on the clock or how long you must stay to recoup title and origination. This mortgage refinance calculator starts from the remaining balance and remaining term—the note you actually have—then applies the new rate, new term, and closing costs.

Read four outputs together: new versus old P&I, cash break-even, interest if you never move, and cost if you sell in the years you typed. Stretching term to manufacture a lower bill is how people refinance into more interest, not less.

How the comparison is built

Current P&I is the amortizing payment on remaining principal, current rate, and months left. New P&I uses the new rate and new term. If you roll closing costs in, the new principal is today’s balance plus fees. Monthly savings is old payment minus new payment.

Cash break-even exists only when you pay fees out of pocket and the payment falls: months = ceil(fees ÷ monthly savings). The keep-N-years line adds interest paid in that window plus remaining balance plus cash fees, then subtracts the same stack on the new loan. A positive savings figure means the refinance is cheaper in that window, not that you should ignore liquidity or a 401(k) match.

How to use it

Copy remaining principal from the latest statement, not the original amount. Years left is the remaining term, not “30” unless you just closed. Put the rate on the Loan Estimate in the new-rate field, and put origination, title, appraisal, and prepaid interest you will actually write a check for in closing costs.

Set “years you expect to keep the new loan” to an honest move horizon—seven is a common default, not a prophecy. Try 15-year and 30-year chips on the same rate. If the 30-year payment win disappears in the lifetime-interest pair, you are buying cash flow, not savings.

Worked examples

A $280,000 balance at 6.875% with 26 years left has P&I of about $1,929. Refinance to 5.875% for 30 years with $5,500 cash closing drops the payment to about $1,656—about $273 a month. Cash break-even is about 21 months. Lifetime interest barely moves (about $322,000 vs $316,000) because the term got longer. If you sell in seven years, this model still shows a few thousand dollars cheaper on the new note after fees.

The same balance into a 15-year at 5.875% raises the payment by about $415 and cuts lifetime interest from about $322,000 to about $142,000. There is no cash break-even on a higher bill. That is the trade: more cash this month versus less interest forever.

What this will not do

It will not underwrite cash-out, recast, or an FHA streamline. It will not remove PMI the month you hit 20% on a new appraisal. Points you buy to lower the rate should sit in the closing-cost field; the new rate should already include them.

Extra principal on the loan you already have is the mortgage payoff calculator. A purchase PITI quote is the mortgage calculator. How much house you can bid is affordability. Keep those four searches on four URLs.

Typical examples

Frequently asked questions

When does refinancing a mortgage make sense?

When the new rate-and-term package, after fees, costs less over the years you will actually keep the loan. A lower payment from stretching 26 years back to 30 can look like a win and still leave almost as much lifetime interest. This page shows both the monthly change and the keep-N-years cost.

How do you calculate refinance break-even?

If you pay closing costs in cash and the new P&I is lower, break-even is closing costs divided by monthly savings, rounded up. If you roll fees into the loan, there is no cash break-even—you finance the fees. If the payment goes up (a shorter term), break-even on the bill does not apply; read lifetime interest instead.

Should I roll closing costs into the new loan?

Rolling costs preserves cash and raises the new principal, so you pay interest on the fees. Paying cash keeps the new balance equal to today’s remaining principal. Toggle the chip and watch the financed amount and the 7-year cost line.

Is this the same as the mortgage payoff calculator?

No. Payoff asks what extra principal does on the current note. Refinance asks whether a new rate, new term, and fees beat that note. Extra principal after you refinance still belongs on the payoff page.

Does a lower payment always mean I save money?

No. Resetting a 26-year remaining term to 30 years can cut the bill and barely cut lifetime interest. Compare the “interest to payoff” pair and the cost if you move in N years, not only the monthly savings headline.