# Refinance Calculator

> Compare your current mortgage or loan with a refinance: new payment, monthly savings, months to recover the closing costs and the lifetime saving.

Category: Finance · Applies to: Worldwide · Last updated: 2026-10-29
Interactive calculator: https://calculators.geekmidst.com/calculators/refinance-calculator

Refinancing pays off with a lower payment, but closing costs come first. The break-even point is how many months of savings it takes to earn those costs back.

Also called: Mortgage refinance calculator, Refinance break-even calculator.

## Inputs
- Current loan balance (default 250000)
- Current interest rate (unit %; default 7)
- Months left on current loan (unit months; default 300)
- New interest rate (unit %; default 5.5)
- New loan term (unit months; default 300)
- Refinancing (closing) costs (default 4000; optional)
- Pay the costs (options: In cash, Add to the new loan; default cash)
- Currency

## Results
- Monthly saving
- Current monthly payment
- New monthly payment
- Break-even
- Lifetime saving (incl. costs)
- Interest left on current loan
- Interest on new loan

## Formula

```
Payment = P × i × (1 + i)^n ÷ ((1 + i)^n − 1);  Monthly saving = Current payment − New payment;  Break-even months = Costs ÷ Monthly saving (rounded up);  Lifetime saving = Current payment × months left − (New payment × new term + costs paid in cash)
```

Where:
- P: loan balance (plus costs if they are added to the new loan)
- i: monthly rate
- n: months

## Worked example
1. Current: $250,000 at 7% over 300 months = $1,766.95 a month.
2. New: $250,000 at 5.5% over 300 months = $1,535.22, saving $231.73 a month.
3. Break-even: 4,000 ÷ 231.73 = 17.3, so 18 months. Over the full term you save ≈ $65,518.78 after costs.

**Result:** Refinancing from 7% to 5.5% saves $231.73 a month and recovers the $4,000 cost in 18 months.

## What the result means

If you expect to sell or refinance again before the break-even month, the refinance loses money. A longer new term lowers the payment but can raise total interest, so check the lifetime saving as well as the monthly one.

## Assumptions and limits
- Both loans are fixed-rate with level monthly payments, and the current payment is recalculated from the balance, rate and months left.
- Property tax and insurance are unchanged, so they are left out.
- The simple break-even ignores the time value of money and differences in how fast each loan builds equity.
- Cash-out refinancing and mortgage insurance changes are not modelled.

## Questions

### How much of a rate drop makes refinancing worth it?

There is no fixed rule. What matters is whether your monthly saving recovers the costs well before you expect to move or pay off the loan.

### Is rolling costs into the loan a good idea?

It avoids paying cash now, but you pay interest on the costs for the whole term and the monthly saving shrinks.

## Related calculators
- [Mortgage Calculator](https://calculators.geekmidst.com/calculators/mortgage-calculator)
- [Loan Amortization Calculator](https://calculators.geekmidst.com/calculators/loan-amortization-calculator)
- [EMI Calculator](https://calculators.geekmidst.com/calculators/emi-calculator)
- [Real Estate Calculator](https://calculators.geekmidst.com/calculators/real-estate-calculator)

_This calculator gives estimates for planning. It is not financial advice, and lenders’ actual terms, fees and rounding may differ._

Source: GM¹X CalcVerse — https://calculators.geekmidst.com/calculators/refinance-calculator