Calculate your potential monthly savings and break-even point.
Current Loan
New Loan
Refinance Analysis Results
Monthly Savings$0.00
Break-Even Point0 Months
Old Payment$0.00
New Payment$0.00
How to Use the Mortgage Refinance Savings Calculator
Refinancing a mortgage can be a powerful financial move, but it is not always the right choice. Our calculator helps you look past the interest rate to see the actual "break-even" point—the moment your monthly savings exceed the upfront costs of the new loan.
Key Factors in Refinancing Decisions
Interest Rate Differential: Generally, a drop of 0.5% to 1% is the benchmark for considering a refinance.
Closing Costs: These usually range from 2% to 5% of the loan amount. You must save enough monthly to recover these costs before you move or sell the home.
Loan Term: If you reset a 25-year remaining term back to a new 30-year term, your monthly payment will drop significantly, but you may pay more in total interest over the life of the loan.
Real-Life Example Analysis
Imagine you have a $300,000 balance on a mortgage at 6.5% with 25 years left. Your current principal and interest payment is approximately $2,025.
If you refinance into a new 30-year loan at 5.25%, your new payment drops to $1,656. That is a monthly saving of $369. However, if your closing costs are $4,500, you need to stay in the house for at least 13 months ($4,500 / $369) just to break even on the transaction.
When Should You Refinance?
You should consider refinancing if you plan to stay in the home longer than the break-even period and if you can lower your rate significantly. It is also a popular strategy for switching from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage to ensure long-term stability.
function calculateRefinance() {
var balance = parseFloat(document.getElementById('loanBalance').value);
var costs = parseFloat(document.getElementById('closingCosts').value);
var rateOld = parseFloat(document.getElementById('currentRate').value) / 100 / 12;
var termOld = parseFloat(document.getElementById('currentTerm').value) * 12;
var rateNew = parseFloat(document.getElementById('newRate').value) / 100 / 12;
var termNew = parseFloat(document.getElementById('newTerm').value) * 12;
if (isNaN(balance) || isNaN(costs) || isNaN(rateOld) || isNaN(termOld) || isNaN(rateNew) || isNaN(termNew)) {
alert("Please enter valid numeric values in all fields.");
return;
}
// Payment Formula: P * [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var p1 = (balance * rateOld * Math.pow(1 + rateOld, termOld)) / (Math.pow(1 + rateOld, termOld) – 1);
var p2 = (balance * rateNew * Math.pow(1 + rateNew, termNew)) / (Math.pow(1 + rateNew, termNew) – 1);
var monthlySavings = p1 – p2;
var breakEvenMonths = monthlySavings > 0 ? (costs / monthlySavings) : 0;
var totalOldRemaining = p1 * termOld;
var totalNew = p2 * termNew;
var lifetimeDifference = totalOldRemaining – totalNew;
document.getElementById('oldPayment').innerText = "$" + p1.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('newPayment').innerText = "$" + p2.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('monthlySavings').innerText = "$" + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings > 0) {
document.getElementById('breakEven').innerText = Math.ceil(breakEvenMonths) + " Months";
document.getElementById('breakEven').style.color = "#2b6cb0";
} else {
document.getElementById('breakEven').innerText = "No Savings";
document.getElementById('breakEven').style.color = "#e53e3e";
}
var impactText = "";
if (lifetimeDifference > 0) {
impactText = "By refinancing, you could save a total of $" + lifetimeDifference.toLocaleString(undefined, {maximumFractionDigits: 0}) + " over the life of the new loan compared to your current schedule.";
} else {
impactText = "Note: While your monthly payment may be lower, the longer term (resetting to " + (termNew/12) + " years) means you may pay more interest over time.";
}
document.getElementById('longTermImpact').innerHTML = impactText;
document.getElementById('resultsArea').style.display = 'block';
// Smooth scroll to results
document.getElementById('resultsArea').scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}