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Mortgage Refinance Calculator — Break-Even & Monthly Savings
Calculate monthly interest savings and break-even recovery months on a refinance.
Current Mortgage & New Terms
Refinance Break-Even Period Formula
Transparent mathematical methodology explained in plain English.
Monthly Savings = Current Monthly P&I - New Monthly P&I | Break-Even (Months) = Total Refinance Closing Costs / Monthly SavingsCalculates monthly payment difference between existing loan and proposed new loan, then divides closing transaction costs by monthly savings to determine recovery timeframe.
Variables Explained:
- Current Loan Balance: Outstanding principal balance on current mortgage.
- Current Rate & Payment: Current interest rate and monthly principal & interest payment.
- New Loan Rate & Term: Proposed interest rate and repayment period (e.g., 15 or 30 years).
- Closing Costs: Total out-of-pocket settlement fees to execute new loan.
Refinancing $320,000 from 7.25% (30-yr) to 5.75% (30-yr) with $4,500 Closing Costs
Computing monthly payment change and break-even point.
- Calculate New Monthly P&I: $320,000 at 5.75% for 30 years = $1,867.24.
- Calculate Monthly Savings: $2,182.72 - $1,867.24 = $315.48 per month.
- Calculate Break-Even Period: $4,500 / $315.48 = 14.26 months (~15 months).
- Lifetime 30-Year Interest Savings: ~$113,570 over the life of the loan.
Frequently Asked Questions: Refinance Calculator
Click any question below to expand quick answers, formulas, and expert tips.
What is considered a good rule of thumb for mortgage refinancing?
Historically, refinancing makes strong financial sense if you can reduce your interest rate by 0.75% to 1.00% or more and plan to stay in the home longer than the break-even period (typically under 24–36 months).
What are no-closing-cost refinances?
In a no-closing-cost refinance, the lender covers settlement fees in exchange for charging a slightly higher interest rate, or wraps the closing costs into your total loan principal balance.