Quick answer
How do you calculate Mortgage Refinance?
Use Monthly savings = Current payment - New payment; break-even months = Closing costs / Monthly savings. Enter the matching values above to calculate the result instantly.
What it measures
Understanding Mortgage Refinance
Compare current and proposed mortgage payments, closing-cost break-even time, and projected remaining interest. A lower payment can come from a lower rate, a longer term, or both. Extending the payoff horizon may improve monthly cash flow while increasing lifetime interest, so the payment difference and remaining-interest comparison should be reviewed together. Break-even also matters when a move or sale is likely.
Interpretation
What the result means
A positive headline result means the proposed principal-and-interest payment is lower. The break-even output estimates how long those monthly savings need to recover entered closing costs.
Action
How to use it
Compare equal payoff dates where possible, test both upfront and financed costs, and obtain official loan estimates before deciding. Consider credit, taxes, escrow changes, prepayment plans, and how long the property will be held.
Limits
What it leaves out
The model assumes fixed rates and level monthly payments. It excludes points, taxes, insurance, mortgage insurance, cash-out proceeds, financed fees, tax effects, recasting, adjustable rates, and lender-specific rounding.
The math
Mortgage Refinance formula
Worked example
Example calculation
- Calculation
- Old payment minus new payment; $8,000 divided by monthly savings
- Result
- Monthly savings and the estimated break-even period
Step by step
How to use this calculator
- 1Enter current loan balance, current interest rate, years remaining, new interest rate, new loan term in years, refinance closing costs.
- 2Keep every input on the same time period and measurement basis.
- 3Review the result, then change one assumption at a time to test scenarios.
Decision support
When this calculator is useful
- Testing refinance break-even
- Comparing monthly payments
- Evaluating remaining interest
Common questions
Frequently asked questions
Which inputs should I use for Mortgage Refinance?
Use current loan balance, current interest rate, years remaining, new interest rate, new loan term in years, refinance closing costs, measured from the same source and period. Include only values that match the definitions shown beside each field.
Why might two Mortgage Refinance calculations differ?
The systems or accounting policies may define current loan balance, current interest rate, years remaining, new interest rate, new loan term in years, refinance closing costs differently. Compare the time period, scope, source, and treatment of exceptional items before comparing results.
How often should I recalculate Mortgage Refinance?
Recalculate when any input changes materially and on the same reporting cadence used for the decision. Save the source and date of each input so the trend remains comparable.
Can I use Mortgage Refinance by itself?
No single metric captures the full decision. Use the result with the related measures, assumptions, and limitations shown on this page.
Calculation reviewed: 2026-06-18. CalcPilot uses the formula shown above and tests representative values during the production build. See our methodology and correction policy.
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