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Mortgage Refinance Calculator

Calculate mortgage refinance savings

Monthly Savings

$215

Current Payment

$1,350

New Payment

$1,136

Break-Even

24 months

Current Loan

Your existing mortgage details

$
%

New Loan

Proposed refinance terms

%
$

Current Payment

$1,350

New Payment

$1,136

Total Savings

-$8,684

Break-Even

24 months

Payment Comparison

Current Payment$1,350
New Payment$1,136
Monthly Savings$215
Closing Costs$5,000

Frequently Asked Questions

Q

Should I refinance my mortgage?

Refinancing makes sense if: 1) You can lower your interest rate by 0.5-1% or more, 2) You'll stay in the home long enough to break even on closing costs, 3) You can reduce your loan term, or 4) You need to lower monthly payments. Calculate break-even point to decide.

  • Rate drop of 0.5%+ on a $300,000 loan saves $90-$180/month
  • Break-even under 36 months means refinancing is usually worth it
  • Shorter term (30yr to 15yr) can save $100,000+ in total interest
  • Cash-out refinance lets you tap equity but increases your balance
  • Credit score of 740+ qualifies you for the best refinance rates
Q

What is the break-even point for refinancing?

Break-even point is when your monthly savings equal the closing costs. Formula: Closing Costs ÷ Monthly Savings = Break-Even Months. If you plan to stay in the home longer than the break-even period, refinancing typically makes sense.

Loan Balance1% Rate Drop Savings/mo$6,000 Closing Costs Break-EvenTotal 25-Year Savings
$200,000$128/mo47 months$32,400
$300,000$192/mo31 months$51,600
$400,000$256/mo23 months$70,800
$500,000$320/mo19 months$90,000
Q

What are typical closing costs for refinancing?

Refinance closing costs typically range from 2-5% of the loan amount ($4,000-$10,000 on a $200,000 loan). Costs include: origination fees, appraisal, title insurance, recording fees, and prepaid items. Some lenders offer "no-cost" refinancing by rolling costs into the loan.

  • No-closing-cost refinance rolls fees into the loan (higher rate, 0.125-0.25%)
  • Shop at least 3 lenders — closing costs vary by $1,000-$3,000
  • Negotiate: origination fees and title insurance are often negotiable
  • Some states have lower recording fees ($50 vs $250+)
Cost ItemTypical Range% of Loan
Origination Fee$1,000-$3,0000.5-1.0%
Appraisal$300-$600Flat fee
Title Insurance$500-$1,5000.25-0.5%
Recording Fees$50-$250Flat fee
Prepaid Items (taxes/insurance)$1,000-$3,000Varies
Total (on $300K loan)$6,000-$15,0002-5%
Q

How much should interest rates drop to refinance?

The general rule is to refinance if you can lower your rate by at least 0.5-1%. However, consider closing costs and how long you'll stay in the home. A smaller rate reduction may make sense if you plan to stay long-term or can significantly reduce the loan term.

Rate DropMonthly Savings ($300K)Break-Even (at $6K costs)Worth It If Staying
0.25%$48/mo125 months10+ years
0.50%$96/mo63 months5+ years
1.00%$192/mo31 months3+ years
1.50%$287/mo21 months2+ years
2.00%$381/mo16 months1.5+ years
Q

Can I refinance with bad credit?

Yes, but your options are limited. FHA streamline refinance requires a minimum 580 credit score and no appraisal if you already have an FHA loan. VA IRRRL (Interest Rate Reduction Refinance Loan) has no minimum credit score for eligible veterans. Conventional refinance typically requires 620+ credit score, with the best rates at 740+.

  • FHA Streamline: 580+ score, no appraisal, must already have FHA loan
  • VA IRRRL: No minimum score, must have existing VA loan
  • Conventional: 620+ minimum, best rates at 740+
  • Each 20-point credit score drop adds ~0.125-0.25% to your rate
  • Improve score 20-40 points before applying: pay down cards below 30% utilization

Example Calculations

1Rate Drop Refinance (Same Remaining Term)

Inputs

Loan Balance$250,000
Current Rate7.0%
Remaining Term300 months
New Rate5.5%
New Term300 months
Closing Costs$6,000

Result

Monthly Savings$232
Current Payment$1,767
New Payment$1,535
Total Savings$63,519
Break-Even26 months

Current payment = $250,000 at 7% over 300 months = $1,767/mo. New payment = $250,000 at 5.5% over 300 months = $1,535/mo. Monthly savings = $1,767 − $1,535 = $232. Break-even = $6,000 / $232 = 26 months. Total savings = $280,084 − $210,566 − $6,000 = $63,519.

2Refinance to Shorter Term

Inputs

Loan Balance$200,000
Current Rate6.5%
Remaining Term300 months
New Rate5.0%
New Term240 months
Closing Costs$5,000

Result

Monthly Savings$31
Current Payment$1,350
New Payment$1,320
Total Savings$83,346
Break-Even164 months

Current payment = $200,000 at 6.5% over 300 months = $1,350/mo. New payment = $200,000 at 5% over 240 months = $1,320/mo. Monthly savings are small ($31), but the shorter term saves $83,346 in total interest after closing costs. Total current interest = $205,124 vs. new interest = $116,779.

3Large Loan Rate Drop (30-Year to 30-Year)

Inputs

Loan Balance$350,000
Current Rate7.25%
Remaining Term360 months
New Rate5.75%
New Term360 months
Closing Costs$8,500

Result

Monthly Savings$346
Current Payment$2,388
New Payment$2,042
Total Savings$116,060
Break-Even25 months

Current payment = $350,000 at 7.25% over 360 months = $2,388/mo. New payment = $350,000 at 5.75% over 360 months = $2,042/mo. Monthly savings = $2,388 - $2,042 = $346. Break-even = $8,500 / $346 = 25 months. Total current interest = $509,680 vs. new total interest = $385,120. Net savings = $509,680 - $385,120 - $8,500 = $116,060.

Formulas Used

Monthly Payment

M = P × r(1 + r)^n / ((1 + r)^n − 1)

Calculates the monthly payment for both the current and new loan.

Where:

M= Monthly payment
P= Loan balance
r= Monthly interest rate (annual rate / 100 / 12)
n= Number of remaining/new payments (months)

Monthly Savings

Monthly Savings = Current Payment − New Payment

The difference between your current and refinanced monthly payment.

Where:

Current Payment= Monthly payment on existing loan
New Payment= Monthly payment on refinanced loan

Total Savings

Total Savings = Current Total Interest − New Total Interest − Closing Costs

Net lifetime savings after accounting for closing costs.

Where:

Current Total Interest= (Current Payment × Remaining Months) − Balance
New Total Interest= (New Payment × New Term) − Balance
Closing Costs= One-time refinancing fees

Break-Even Point

Break-Even Months = Closing Costs / Monthly Savings

Number of months until your cumulative savings recoup the closing costs.

Where:

Closing Costs= Total refinance closing fees
Monthly Savings= Current payment minus new payment

Understanding Mortgage Refinancing

Refinancing replaces your current mortgage with a new loan, typically at a lower rate.

Break-even analysis helps determine if refinancing saves money.

Closing costs must be recovered through monthly savings for refinancing to be worthwhile.

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Last Updated: Feb 13, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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