Is Refinancing Your Mortgage Worth It? | Free Calculator
Calculate your refinance break-even point instantly. See exactly how long until closing costs pay off, total savings over time, and whether refinancing makes sense for your situation.
Is Refinancing Your Mortgage Worth It?
Enter your current loan details and the new rate you've been quoted. This calculator shows your exact break-even point and total savings—no guessing required.
Current Loan
New Loan
Typically 2-5% of loan amount
Enter your current and new loan details, then click "Compare Loans" to see if refinancing makes sense.
What This Calculator Answers
The refinance decision comes down to one question: Will you stay in your home long enough to recover closing costs? This calculator gives you the exact answer by computing your break-even point—the number of months until your monthly savings exceed what you paid to refinance.
Unlike generic calculators that only show monthly payment changes, this tool factors in your remaining loan term, total interest paid over time, and the true cost of resetting your amortization schedule. You'll see whether refinancing actually saves money or just feels like it does.
When Refinancing Makes Sense
- ✓Rate drop of 0.75% or more — Generally produces a break-even under 2 years on most loan sizes.
- ✓You'll stay 3+ years past break-even — The longer you stay, the more you save. Refinancing right before selling is almost always a loss.
- ✓You're early in your loan — Refinancing in years 1-10 captures more interest savings than refinancing in year 20.
- ✓You can get closing costs under 2% — Shop aggressively. Every dollar in closing costs extends your break-even.
Common Refinancing Mistakes
- ✗Ignoring the term reset — Refinancing a 25-year-old loan into a new 30-year adds 5 years of payments. Compare total cost, not just monthly payment.
- ✗Rolling closing costs into the loan — This hides the true cost and means you're paying interest on your closing costs for 30 years.
- ✗Refinancing too often — Each refi resets your amortization. Serial refinancers often pay more total interest than people who never refinance.
- ✗Chasing small rate drops — A 0.25% rate drop rarely justifies $5,000+ in closing costs unless you have a very large loan balance.
Frequently Asked Questions
How do I know if refinancing my mortgage is worth it?
Refinancing is worth it when your total savings exceed closing costs before you sell or refinance again. Calculate your break-even point by dividing closing costs by monthly savings. If you'll stay past that point, refinancing likely makes sense.
What is a good break-even point for refinancing?
A break-even point under 24 months is generally considered good. Under 18 months is excellent. If your break-even exceeds 36 months, carefully consider whether you'll stay in the home long enough to benefit.
Should I refinance if I'm planning to move in 3 years?
Only if your break-even point is well under 3 years. Calculate your exact break-even, then add a buffer for uncertainty. If break-even is 30+ months and you might move in 36 months, the risk may not be worth it.
Is it worth refinancing for 0.5% lower rate?
It depends on your loan balance and closing costs. On a $400,000 loan, 0.5% saves roughly $115/month. With $6,000 in closing costs, you'd break even in about 52 months. Use this calculator to see your exact numbers.
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