Mortgage refinance calculator
Compare your current mortgage with a refinance: new payment, break-even point, lifetime interest and a plain verdict.
Current loan
What you owe today and the terms you are paying now.
New loan
The rate and term you have been quoted.
Typically 2% to 5% of the balance. 2% of $300,000 is $6,000.
Extra cash borrowed against your equity. Leave at 0 for a rate-and-term refinance.
Warren provides educational information, not individualized financial, tax or legal advice. Read our disclaimers.
When refinancing makes sense
- The rate drops meaningfully
- A lower rate on a large balance can cut hundreds from the monthly payment. The bigger the balance and the longer you keep the loan, the more a small rate drop matters.
- You will stay past the break-even point
- Closing costs are paid upfront and recovered slowly. If you plan to move before the monthly savings repay them, the refinance costs more than it saves.
- You want a shorter term
- Moving from a 30-year to a 15-year loan raises the payment but can save tens of thousands in interest. It works best when your income is stable and the higher payment fits the budget.
- You need to change the loan type
- Switching from an adjustable rate to a fixed rate, or dropping mortgage insurance once you have 20% equity, can be worth it even when the headline rate barely moves.
Frequently asked questions
- What is the break-even point on a refinance?
- The break-even point is the number of months it takes for your monthly savings to repay the closing costs. If closing costs are $6,000 and you save $150 a month, you break even after 40 months. If you plan to sell or refinance again before then, the refinance loses money.
- How much are refinance closing costs?
- Closing costs usually run 2% to 5% of the loan balance. They cover the appraisal, title search, lender origination fees, recording fees and prepaid items like escrow deposits. Some lenders offer a "no-closing-cost" refinance, which means the costs are rolled into the balance or offset by a higher rate, not waived.
- How much does the rate need to drop before refinancing is worth it?
- There is no fixed rule. A drop of 0.5 to 1 percentage point often pays off for larger balances, while small balances need a bigger gap to cover closing costs. Run the numbers with your actual closing costs and how long you plan to stay rather than relying on a rule of thumb.
- Does refinancing reset my loan term?
- Usually, yes. If you are 8 years into a 30-year loan and refinance into a new 30-year loan, you add 8 years of payments. Even with a lower rate, that can mean more total interest. Choosing a shorter new term, or making extra payments to match your old payoff date, avoids the reset.
- Is a cash-out refinance a good idea?
- A cash-out refinance replaces your mortgage with a larger one and gives you the difference in cash. It can be cheaper than a personal loan or credit card for big expenses, but you are borrowing against your home and paying interest for decades. It makes the most sense for home improvements or consolidating high-rate debt, not for spending.
Want help deciding on a refinance?
Warren AI can weigh a refinance against your full financial picture, from your equity and cash flow to your other goals.