Determine if refinancing your current mortgage will save you money over the long term.
30 Years
20 Years
15 Years
10 Years
Refinance Analysis Results
New Monthly Payment:
Monthly Savings:
Break-Even Point:
Total Lifetime Savings:
function calculateRefinance() {
var balance = parseFloat(document.getElementById('refi_balance').value);
var oldPayment = parseFloat(document.getElementById('refi_oldPayment').value);
var newRate = parseFloat(document.getElementById('refi_newRate').value) / 100 / 12;
var termYears = parseInt(document.getElementById('refi_term').value);
var termMonths = termYears * 12;
var costs = parseFloat(document.getElementById('refi_costs').value);
if (isNaN(balance) || isNaN(oldPayment) || isNaN(newRate) || isNaN(costs)) {
alert("Please fill in all fields with valid numbers.");
return;
}
// Amortization formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var x = Math.pow(1 + newRate, termMonths);
var newPayment = (balance * x * newRate) / (x – 1);
var monthlySavings = oldPayment – newPayment;
var breakEvenMonths = costs / monthlySavings;
var totalNewInterest = (newPayment * termMonths) – balance;
var totalSavings = (monthlySavings * termMonths) – costs;
document.getElementById('res_newPayment').innerText = "$" + newPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('res_monthlySavings').innerText = "$" + monthlySavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (monthlySavings <= 0) {
document.getElementById('res_breakEven').innerText = "Never";
document.getElementById('res_totalSavings').innerText = "$0.00";
document.getElementById('res_verdict').innerText = "Based on these numbers, your new payment would be higher than or equal to your current payment. Refinancing may not be financially beneficial unless you are trying to shorten your term significantly.";
} else {
document.getElementById('res_breakEven').innerText = Math.ceil(breakEvenMonths) + " Months";
document.getElementById('res_totalSavings').innerText = "$" + totalSavings.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var verdict = "It will take approximately " + Math.ceil(breakEvenMonths) + " months to recover your closing costs. ";
if (breakEvenMonths < 36) {
verdict += "This is considered a strong refinance opportunity since the break-even period is under 3 years.";
} else if (breakEvenMonths < 60) {
verdict += "This is a moderate refinance opportunity. Ensure you plan to stay in the home for at least 5 years.";
} else {
verdict += "The break-even period is quite long. Consider if the long-term interest savings outweigh the upfront costs.";
}
document.getElementById('res_verdict').innerText = verdict;
}
document.getElementById('refi_result').style.display = 'block';
}
How to Use the Mortgage Refinance Savings Calculator
Deciding to refinance your mortgage is a major financial move. Our calculator helps you strip away the complexity by focusing on the "Break-Even Point"—the moment where your monthly savings finally outweigh the upfront costs of getting the new loan.
Key Definitions
Remaining Loan Balance: The total amount you currently owe your lender (not the original price of the home).
New Interest Rate: The annual percentage rate (APR) offered by your potential new lender.
Closing Costs: The fees paid at the end of the transaction, including appraisal fees, title insurance, and origination fees.
Break-Even Point: The number of months it takes for your cumulative monthly savings to equal the costs you paid to refinance.
Example Calculation: Real-World Scenario
Imagine you have a current loan balance of $350,000 at a 6.5% interest rate. You are offered a new rate of 5.25% on a 30-year term. Your closing costs are estimated at $7,000.
Current Payment: $2,212.00
New Payment: $1,932.00
Monthly Savings: $280.00
Break-Even Calculation: $7,000 / $280 = 25 Months
In this example, if you plan to stay in your home for more than 2 years and 1 month, refinancing is a winning strategy that will save you thousands of dollars over the life of the loan.
When Should You Refinance?
Most financial experts suggest that if you can lower your interest rate by at least 0.75% to 1%, refinancing is worth investigating. However, you should also consider your long-term plans. If you plan on moving within the next 2 years, you likely won't reach the break-even point, meaning you would actually lose money despite having a lower monthly payment.
Reasons to Refinance Beyond Savings
While saving money is the primary goal, homeowners also refinance to:
Shorten the Loan Term: Moving from a 30-year to a 15-year mortgage to build equity faster.
Switch from ARM to Fixed: Moving from an Adjustable-Rate Mortgage to a Fixed-Rate Mortgage for payment stability.
Cash-Out Refinance: Accessing home equity for renovations or debt consolidation.
Eliminate PMI: If your home value has increased, a new loan might allow you to remove Private Mortgage Insurance.