Calculate your monthly savings and the break-even point for your mortgage refinance.
New Monthly Payment:
Monthly Savings:
Break-Even Point:
Total Interest Paid (New Loan):
How to Use the Mortgage Refinance Savings Calculator
Refinancing a mortgage can be a powerful financial move, but it is essential to look beyond the lower interest rate. Our calculator helps you determine if the long-term savings outweigh the upfront costs of the new loan.
Understanding the Inputs
Loan Balance: The remaining principal amount you owe on your current mortgage.
Current Payment: Only include Principal and Interest (P&I). Do not include taxes or insurance (escrow).
New Interest Rate: The annual percentage rate offered by your lender for the refinance.
Closing Costs: Usually 2% to 5% of the loan amount, including appraisal fees, origination fees, and title insurance.
Refinance Scenarios: Realistic Examples
Scenario
Current Rate
New Rate
Monthly Savings
Break-Even
Rate Drop (1%)
7.5%
6.5%
~$220
23 Months
Small Drop (0.5%)
7.0%
6.5%
~$110
45 Months
When is Refinancing Worth It?
A common rule of thumb is that refinancing is worth it if you can reduce your interest rate by at least 0.75% to 1%. However, the most critical metric is the Break-Even Point. This is the number of months it takes for your monthly savings to pay back the closing costs of the refinance. If you plan to sell the home or move before reaching the break-even point, refinancing may actually lose you money.
The Math Behind the Calculation
The new monthly payment is calculated using the standard amortization formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Where M is the monthly payment, P is the loan principal, i is the monthly interest rate, and n is the total number of months in the term.
function calculateRefinance() {
var balance = parseFloat(document.getElementById('refi_loanBalance').value);
var oldPayment = parseFloat(document.getElementById('refi_oldPayment').value);
var newRateInput = parseFloat(document.getElementById('refi_newRate').value);
var newTermYears = parseFloat(document.getElementById('refi_newTerm').value);
var closingCosts = parseFloat(document.getElementById('refi_closingCosts').value);
if (isNaN(balance) || isNaN(oldPayment) || isNaN(newRateInput) || isNaN(newTermYears) || isNaN(closingCosts)) {
alert("Please enter valid numbers in all fields.");
return;
}
// Monthly interest calculation
var monthlyRate = (newRateInput / 100) / 12;
var totalMonths = newTermYears * 12;
// Amortization Formula: P * (r(1+r)^n) / ((1+r)^n – 1)
var x = Math.pow(1 + monthlyRate, totalMonths);
var newPayment = (balance * x * monthlyRate) / (x – 1);
var monthlySavings = oldPayment – newPayment;
var totalInterest = (newPayment * totalMonths) – balance;
var breakEvenMonths = closingCosts / monthlySavings;
// Display Results
document.getElementById('refi_results').style.display = 'block';
document.getElementById('res_newPayment').innerText = '$' + newPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var savingsEl = document.getElementById('res_monthlySavings');
savingsEl.innerText = '$' + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings > 0) {
savingsEl.className = 'refi-result-value refi-savings-positive';
document.getElementById('res_breakEven').innerText = Math.ceil(breakEvenMonths) + " Months";
} else {
savingsEl.className = 'refi-result-value refi-savings-negative';
document.getElementById('res_breakEven').innerText = "No Break-Even (Cost exceeds savings)";
}
document.getElementById('res_totalInterest').innerText = '$' + totalInterest.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}