Refinance Calculator
Calculate whether refinancing your mortgage makes financial sense by comparing monthly savings and break-even point.
Input Parameters
Results
Is Refinancing Worth It?
Refinancing makes sense when the monthly savings exceed the closing costs within a reasonable break-even period (typically under 24 months). Consider your plans to stay in the home vs. break-even timeline.
What is the Refinance Calculator?
The Refinance Calculator determines if it makes financial sense to replace your current mortgage with a new one. It compares the interest savings of a lower rate against the heavy upfront closing costs required by the bank.
How It Works (Algorithm)
The tool runs two amortizations simultaneously: your current loan trajectory versus the proposed new loan. It calculates the difference in monthly payments to find your monthly savings, and divides the closing costs by those savings to calculate your "Break-Even Point".
$$ \text{Break-Even Months} = \frac{\text{Total Closing Costs}}{\text{Monthly Savings}} $$
Determines how long you must live in the house to make refinancing worth it.
How to Use It
Enter the details of your current loan (balance, rate, remaining time). Then, enter the details of the proposed new loan (new lower rate, term length, and estimated closing costs). The tool will tell you exactly how many months it will take to break even.