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Refinance Calculator

Refinancing $412,000 from 7.25% to 5.99% with 27 years left and $4,500 in costs drops the payment $333.03 a month, for lifetime savings of about $103,400. Refinancing replaces an existing mortgage with a new one at a different rate, and the payoff is the gap between the two payment streams; this calculator amortizes the current balance at both rates over the years remaining, then subtracts closing costs from the lifetime difference.

Lifetime savings
$103,402
Monthly savings
$333.03
Break-even
14
months
New payment
$2,568.25
Refinancing saves about $103,402 over the loan
$333/month lower, breaking even on closing costs in about 14 months.
Before vs after
Lifetime view
Current (7.25%)
$2,901/mo
New (5.99%)
$2,568/mo
Break-even timeline
Paying back closing costs $4,50014 months · then saving $333/mo
Inputs
Your loan now
Current balance
$
Current rate
%
Years remaining
yr
The offer
New rate
%
Closing costs
$
You recoup the costs in about 14 months
The closing costs pay back through lower payments after roughly 14 months — after that the monthly savings are yours. Refinancing tends to pay off only if you'll stay well past that break-even point.
This keeps your remaining term
It compares the same 27 years left. Refinancing into a fresh 30-year term lowers the payment more but can raise total interest even at a lower rate. A drop around 0.75-1%+ is the usual threshold to bother.
Ask a follow-up
Uses your inputs above
$103,402 lifetime savings. Want to try a variation?

The math

Reviewed 2026
Formula
savings = (M_old − M_new) · n − closing_costs
M monthly payment · n months remaining
Same term as remaining
No prepayment

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Example: how refinance is calculated

Step-by-step with default inputs

Suppose you put the default values into Refinance Calculator:

Current balance
$412,000
Current rate
7.25%
New rate
5.99%
Years remaining
27 yr
Closing costs
$4,500

Plug those into the formula savings = (M_old − M_new) · n − closing_costs and the result is:

Lifetime savings
$103,402

At the defaults, $412,000 amortized over the remaining 324 months costs $2,901.28 a month at 7.25% and $2,568.25 at 5.99% — a difference of $333.03. Over 324 months that difference totals about $107,900; subtracting the $4,500 in closing costs leaves roughly $103,400 in lifetime savings. The closing costs are recovered after 14 months of payment savings.

How to calculate refinance by hand

  1. Divide each rate by 12 for the monthly rates: 7.25% → 0.006042 and 5.99% → 0.004992.
  2. Count the remaining payments: 27 years × 12 = 324.
  3. Amortize the $412,000 balance at each rate with M = P · r / (1 − (1+r)^−n): $2,901.28 old versus $2,568.25 new.
  4. Multiply the $333.03 monthly difference by 324 payments and subtract the $4,500 closing costs: about $103,400.
  5. Divide closing costs by monthly savings for the break-even: $4,500 / $333.03 ≈ 14 months.

How does the refinance calculator work?

Both scenarios use the standard amortization formula on the same balance and the same remaining term, which isolates the effect of the rate alone. Monthly savings is the difference between the two payments; lifetime savings is that difference times the number of remaining payments, minus closing costs; break-even is closing costs divided by monthly savings — the months until the up-front cost is recovered. Consistent with CFPB methodology, the model does not extend the term (which would lower the payment through added months, not the rate), roll costs into the new balance, or guess how long the mortgage will actually be kept.

References: CFPB methodology.

Last reviewed July 2, 2026 · Editorial policy

Frequently asked questions

How is the refinance break-even point calculated?

Closing costs divided by monthly payment savings: $4,500 / $333.03 ≈ 13.5, shown as 14 months. Keeping the loan longer than that recovers the up-front cost; exiting sooner means the costs were never earned back.

Can lifetime refinance savings be negative?

Yes. When the monthly savings times the remaining months is less than the closing costs — a small rate drop or a short remaining term — the formula goes negative. Savings are positive only when (M_old − M_new) × n exceeds the costs.

How much is each 0.25% of rate worth?

On the default $412,000 balance with 27 years remaining, dropping from 7.25% to 7.00% lowers the payment by $67.48 a month — nearly $21,900 across 324 payments before costs. Deeper cuts scale roughly in proportion.

What changes if closing costs are rolled into the loan?

This calculator treats them as paid up front. Financing them instead would raise the new balance and payment slightly, so the monthly savings would shrink and the break-even would stretch — you would also be paying interest on the costs themselves.

What does this calculator assume?

Same term as remaining See the math card above for the full list.

How accurate is this refinance calculator?

The math is deterministic — the same inputs always produce the same output, and the formula is shown above. Accuracy of the answer for your situation depends on how well your inputs match reality and how well the formula models the question.

Guides

Should I refinance my mortgage?When refinancing a mortgage is worth it — the rate-drop rule of thumb, how to find your break-even month on closing costs, and the traps to avoid.