Mortgage Refinance Calculator - Break-Even and Savings (2026)
Compare current and proposed mortgage payments, closing costs, break-even time, remaining interest and lifetime cost before refinancing.
Refinancing $280,000 with 25 years remaining at 7.5% ($1,983 monthly, $315,000 remaining interest) into a 30-year loan at 6.3% ($1,734 monthly) saves $249 per month and breaks even on $5,000 closing costs in about 20 months if you pay cash. Rolling the $5,000 into the new $285,000 loan raises the payment to $1,764, saving $219 per month with break-even at 23 months but adding $16,800 in total interest versus paying cash. According to Freddie Mac PMMS August 2026 the average 30-year fixed was 6.82%. Enter your balance and rates below for your exact break-even.
Mortgage Refinance Calculator
Enter your details for an instant result
How to Use the Mortgage Refinance Calculator
Enter Current Loan Details
Enter the current balance such as $280,000, current rate like 7.5% and remaining months such as 300. The current P&I of $1,983 and $315,000 remaining interest anchor the comparison.
Enter New Loan Quote
Enter the quoted new rate near 6.3% in August 2026 and new term 15 to 30 years. A 30-year 6.3% on $280,000 is $1,734, saving $249 monthly but adding 5 years.
Add Closing Costs and Choose Pay Method
Enter costs like $5,000 and choose pay cash versus roll into loan. Pay cash breaks even in 20 months; rolling to $285,000 raises payment to $1,764 and breaks even in 23 months.
Compare Breakeven, Total Interest and Payoff Date
Check break-even months, lifetime interest on remaining term versus new term and the new payoff date. A shorter 25-year at 6.3% is $1,854, saving $129 monthly but also cutting 5 years and $142,000 interest.
Test Holding Period
Change new term to 25-year and compare total cost if you sell in 7 years versus stay 15 years to see if the refinance pays off in your horizon.
Refinance Monthly Saving and Break-Even by Rate Drop on $280,000 (2026)
| Rate drop | Old 7.5% 25yr P&I | New 30yr P&I | Monthly saving | Break-even on $5k |
|---|---|---|---|---|
| 0.5% to 7.0% | $1,983 | $1,860 | $123 | 41 months |
| 1.0% to 6.5% | $1,983 | $1,768 | $215 | 23 months |
| 1.2% to 6.3% | $1,983 | $1,734 | $249 | 20 months |
| 1.5% to 6.0% | $1,983 | $1,682 | $301 | 17 months |
| 2.0% to 5.5% | $1,983 | $1,602 | $381 | 13 months |
| 1.2% to 6.3% 25yr new | $1,983 | $1,854 | $129 | 39 months |
| 1.2% to 6.3% 20yr new | $1,983 | $2,050 | -$67 | Never (higher payment) |
Will Refinancing Actually Save Money or Just Lower the Payment?
Saving money requires beating both the monthly and the lifetime test. For $280,000 with 25 years left at 7.5%, remaining P&I is $1,983 and remaining interest is about $315,000 over 300 months. Refinancing to 30 years at 6.3% cuts P&I to $1,734, saving $249 monthly, but total interest over the new 360 months is about $344,000, $29,000 more than remaining interest because you add 5 years (Source: Freddie Mac PMMS 6.82% Aug 2026). The payment win is real, the lifetime win depends on holding period and term choice, with $5,000 costs adding $16,800 if rolled.
Compare three numbers: break-even months, total interest on the remaining term versus the new term, and the payoff dates. If you will sell in 7 years, the 20-month break-even pays off and you capture 64 months of $249 savings ($15,936) before sale. If you will stay 15 years, total interest dominates. Use the Mortgage Calculator to verify the current remaining interest baseline.
How Is Break-Even Calculated and Does Rolling Costs Matter?
Simple break-even is closing costs divided by monthly P&I savings. At $5,000 costs and $249 saving, break-even is 20.1 months when you pay cash. Rolling the $5,000 into a $285,000 loan at the same 6.3% 30-year raises the new payment to $1,764, saving $219, so break-even is 22.8 months, but lifetime interest rises by about $16,800 versus paying cash because the $5,000 itself accrues at 6.3% for 360 months.
| Pay method | New payment | Saving vs old | Break-even | Extra lifetime interest |
|---|---|---|---|---|
| Pay $5k cash | $1,734 | $249 | 20 months | $0 |
| Roll $5k into loan | $1,764 | $219 | 23 months | $16,800 |
Pay cash when you have 6-month reserves; roll when you must preserve liquidity. Check the net APR after points with the Personal Loan Calculator logic for fee amortization and confirm the Loan Estimate line by line.
Should You Refinance to a Shorter Term or Keep the 30-Year?
Shorter terms cut total interest dramatically but raise payment. The same $280,000 at 6.3%: 30-year is $1,734 with $344,000 total interest, 25-year is $1,854 with $276,000 interest saving $68,000 and 5 years, 20-year is $2,050 with $212,000 interest saving $132,000 but costing $67 more than the old $1,983. The 30-year saves monthly, the 25-year balances both goals, the 20-year is a payoff accelerator.
Choosing a term near the remaining 25 years isolates the rate benefit: 25-year at 6.3% saves $129 monthly and $39,000 total interest versus the old 7.5% 25-year ($1,983 vs $1,854), with the same payoff date. Run the shorter-term math and compare to simply paying $129 extra on the old loan, which saves without $5,000 closing costs. Model the extra-payment alternative with the Loan Payoff Calculator.
When Does Refinancing Not Make Sense Even With a Lower Rate?
Refinancing fails when holding period is short, costs are high or you restart a long term for a small rate drop. Dropping from 7.5% to 7.0% on $280,000 30-year saves only $123 monthly, so $5,000 costs need 41 months to break even; selling in 24 months loses $2,048. Points make it worse: 1 point ($2,800) for a 0.25% drop from 6.30% to 6.05% saves $45 monthly, needing 62 months to recover the point plus $5,000 fees.
No-cost refinance at a higher 6.55% saves $206 monthly with $0 cash break-even, better for a 4-year hold than paying $5,000 for 6.3% that needs 20 months. Compare rate, APR, points, credits and cash-to-close on written Loan Estimates within a 14-day shopping window to count as one inquiry, and verify the home still appraises after price moves.
Mortgage Refinance Calculator - Frequently Asked Questions
Related Calculators
Mortgage Calculator
LiveEstimate monthly payments with principal, interest, taxes, insurance and PMI.
Key inputs: Home price, Down payment, Interest rate
Calculate freeAuto Loan Calculator
LivePlan car payments with trade-in value, sales tax and loan terms.
Key inputs: Vehicle price, Down payment, Interest rate
Calculate freePersonal Loan Calculator
LiveCompare monthly payments and total cost for personal loans.
Key inputs: Loan amount, Interest rate, Term
Calculate freeStudent Loan Calculator
LiveEstimate payments and total interest for federal and private student loans.
Key inputs: Loan balance, Interest rate, Repayment plan
Calculate freeLoan Payoff Calculator
LiveSee how extra payments shorten your term and cut total interest.
Key inputs: Balance, Rate, Extra payment
Calculate freeDebt-to-Income Calculator
LiveCalculate your DTI ratio and see how lenders view your profile.
Key inputs: Gross income, Monthly debts
Calculate free