The rate drop is real and you are staying
A meaningful rate reduction, closing costs you recoup well before you would move, and no intention to sell soon. That is the textbook case and it does not need agonizing over.
Refinance Break-Even Calculator
A lower payment is not the same as saving money. See the break-even month, the effect on total interest, and what happens if you keep paying your current amount on the new loan.
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Stay, refinance, or refinance and keep paying the same
Principal and interest only. Property taxes, homeowners insurance, PMI and HOA dues are not included.
The numbers that decide it
Break-even assumes you pay the closing costs up front. If you roll them into the balance there is nothing to recoup month by month, but you borrow more and pay interest on the fees for the life of the loan.
The reset trap
Refinance advertising talks about the rate and the new payment, never about the calendar. If you are seven years into a 30-year mortgage and you refinance into a fresh 30-year loan, you have just turned 23 remaining years of payments into 30. The monthly bill falls, which feels like winning, while the total interest can quietly rise even though the rate went down. The middle column above tells you which of the two happened for your numbers.
This is not an argument against refinancing. It is an argument for refinancing correctly: take the better rate, then either choose a term close to what you had left, or keep sending your old payment on the new loan. The third column shows that second route, and for most people it is where the actual saving lives — the same rate cut, without giving back the years you have already paid for.
When a refinance clearly makes sense
You can shed mortgage insurance
If your home has appreciated past 20% equity, a refinance can remove PMI even if the rate barely moves. Compare it against simply requesting cancellation on your current loan first, which is free.
You might move within the break-even
If the break-even is 31 months and there is a decent chance you sell in two years, you are paying for a benefit you will never collect.
Before assuming a refinance is the answer, it is worth checking what the money would do applied straight to your current loan. The payoff calculator compares extra payments and a recast on the loan you already have — both of which cost nothing or almost nothing to start.
Frequently asked questions
How is the refinance break-even point calculated?
Closing costs divided by the monthly payment saving. If the refinance costs $6,000 and lowers your payment by $250, you break even in 24 months. If you might sell or refinance again before that point, the refinance loses money.
Can a lower interest rate still cost me more?
Yes, and it is the most common trap in refinancing. If you are eight years into a 30-year loan and refinance into a new 30-year loan, you restart the clock: 22 years of remaining payments become 30. Even at a lower rate, stretching the balance over more years can raise total interest. The calculator shows this explicitly rather than hiding it behind the monthly saving.
How do I refinance without restarting the clock?
Two ways. Either refinance into a shorter term that matches roughly what you have left, or take the longer term for safety and keep paying your old payment amount voluntarily. The third column above models exactly that, and it is usually where the real money is.
What about a no-cost refinance?
There is no such thing as free. A no-cost refinance folds the fees into the loan balance or, more often, into a slightly higher rate. It can still be worthwhile when you do not plan to stay long, because there is nothing to recoup. Tick the box to roll the costs into the balance and see what it does to the total.
Should I refinance to take cash out?
That is a different decision and this calculator does not model it. A cash-out refinance raises your balance and usually your rate, and turns unsecured needs into debt secured by your home. Treat it with far more caution than a rate-and-term refinance.
What credit score and equity do I need?
Conventional rate-and-term refinances generally want at least 20% equity to avoid mortgage insurance, and pricing improves sharply above a 740 credit score. Ask two or three lenders for a Loan Estimate on the same day and compare the total closing costs, not just the rate.
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The main tool: extra payments, recast, payoff-vs-invest, biweekly, PMI removal and the full amortization schedule in one place.
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What paying half your mortgage every two weeks really does, and the free way to get the same result.
15 vs. 30 year mortgage
Compare both terms side by side, including the third option most people miss: take the 30 and pay it like a 15.
How this is calculated
Both loans are amortized month by month at their own rate, and closing costs are either added to the new balance or charged against the saving, according to the box you tick. Every formula on this site is published in plain English on the methodology page, including a worked example you can verify by hand.
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These results are estimates, not financial advice. They depend entirely on the figures you enter and exclude taxes, insurance, PMI, HOA dues and any lender fee. Confirm your actual terms with your servicer and speak to a licensed professional before acting. Read the full disclaimer.