Mortgage Refinance Savings Calculator
Calculate your break-even point and total savings.
Calculation Summary
Monthly Savings:
Break-Even Period:
Total Savings Over Period:
Outcome:
Understanding Your Mortgage Refinance Savings
Deciding to refinance your mortgage is a significant financial move. While a lower interest rate is enticing, it's essential to look at the "Break-Even Point"—the moment where your monthly savings have finally covered the cost of the refinance itself.
How the Break-Even Point Works
Refinancing usually costs between 2% and 5% of the loan amount in closing costs (appraisal fees, origination fees, title insurance, etc.). If your closing costs are $5,000 and you save $200 per month, it will take you 25 months to "break even." If you plan to sell the house or refinance again before those 25 months are up, you will actually lose money on the deal.
Example Calculation:
- Current Payment: $1,800
- New Payment: $1,550
- Monthly Savings: $250
- Closing Costs: $6,000
- Break-Even: $6,000 / $250 = 24 Months
When Should You Refinance?
Most financial experts suggest refinancing is a good idea if you can lower your interest rate by at least 0.75% to 1%. However, the most important factor is your timeline. If you plan to stay in your home for 10+ years, even a small monthly saving adds up to tens of thousands of dollars in interest avoided over the life of the loan.
Factors That Impact Your Results
Remember that this calculator focuses on Principal and Interest (P&I). Taxes and insurance usually remain the same or change regardless of the refinance. Be sure to check if your new loan extends your term; for example, if you have 20 years left on your current mortgage and refinance into a new 30-year term, you may pay more interest over time despite a lower monthly payment.