Refinance Calculator Online

How to Use the Refinance Calculator

1. Enter Your Current Loan: Type in the remaining balance, current interest rate (APR), and months left on the term. If you have your most recent mortgage statement open, copy the principal balance line directly — the calculator uses it to compute remaining interest under your existing loan.
2. Enter the New Loan Offer: Add the new rate, new term length (15, 20, or 30 years are most common), and total estimated closing costs from your Loan Estimate (the lender's standardized disclosure required within 3 business days of application). Optionally toggle whether you'll roll the closing costs into the new loan or pay them upfront.
3. Review Break-Even and Lifetime Savings: The calculator returns the new monthly payment, monthly savings vs. your current payment, break-even month (when cumulative savings equal closing costs), total interest paid under each loan, and net lifetime savings if you stay to the new loan's payoff. All math runs in your browser — nothing is uploaded.
4. Stress-Test the Decision: Adjust the "years you plan to stay" field. If you'll move before the break-even month, the refi loses money. Try a 15-year new term if you can afford the higher payment — the interest savings often dwarf any rate-drop benefit on a 30-year extension.

Why Run the Numbers Before Refinancing?

A refinance replaces your existing mortgage with a new loan — ideally at a lower rate, shorter term, or both. Lenders quote the rate drop in headline percentage points, but the only number that matters is the break-even month: closing costs divided by monthly savings. If you'll sell, move, or refinance again before that month, you lose money on the deal even with a "great rate." Real scenarios this calculator answers:

• The 1% rule-of-thumb check — The traditional guidance is that refinancing makes sense only if the new rate is at least 1 percentage point lower than your current one. Modern guidance from Bankrate, NerdWallet, and most lenders relaxes this to 0.5-0.75% if closing costs are low and you'll stay 5+ years. The calculator lets you skip the rule-of-thumb and check your actual break-even.
• Recovered closing costs in 24-36 months — A healthy refi recovers closing costs in roughly 2-3 years. If your break-even comes out past 60 months, the rate drop probably isn't enough to justify the transaction unless you're also shortening the term.
• Plan-to-stay test — If you'll likely move in under 5 years, even a strong rate drop usually loses to keeping the existing loan. The calculator's "years you plan to stay" input flips the recommendation honestly.
• Term-shortening (30 → 15) — Many homeowners refinance not to lower the payment but to switch from 30-year to 15-year at a lower rate (15-year rates ran roughly 0.66 percentage points below 30-year rates in Freddie Mac's late-May 2026 PMMS — 5.85% vs. 6.51%). Total interest paid drops dramatically; monthly payment rises.
• Cash-out vs. rate-and-term — A rate-and-term refi just replaces the old balance. A cash-out refi taps equity for a lump sum — useful for capital home improvements (interest may stay deductible under IRS Publication 936) but raises the loan balance and usually carries a slightly higher rate.
• Pre-application sanity check — Run the numbers before paying a lender's application fee. If the break-even is ugly even with a generous rate assumption, the refi isn't going to make sense at the actual offered rate.

Refinance Decision Rules of Thumb

Rule	Traditional version	Modern version (lower closing costs, online lenders)
Minimum rate drop	2 percentage points (1980s-90s guidance)	0.5-1.0 percentage points
Break-even target	Recover closing costs in ≤36 months	Recover in ≤24 months ideally; 60 months is the outer limit
Plan-to-stay floor	At least until break-even month	5+ years for rate-and-term; 7+ for cash-out
Closing costs (% of loan)	3-6% historical norm	2-5% typical today (Bankrate/Chase/LendingTree)
Credit-score floor	740+ for best pricing	760+ for best 2026 conventional pricing; 620 for FHA
Equity required	20% to avoid PMI	20% conventional; 3.5% FHA; 0% VA IRRRL; 0% USDA streamline

Refinance Type Comparison

Type	What it does	Closing costs	Best when
Rate-and-term refi	Lowers rate, shortens/lengthens term; loan balance unchanged	2-5% of new loan	Current rate is 0.5-1%+ above market and you'll stay past break-even
Cash-out refi	New loan is larger than old balance; difference paid to you in cash	2-5%; rate usually 0.125-0.5% higher than rate-and-term	You need a lump sum for capital improvements or debt consolidation and want a single fixed payment
HELOC	Second loan (line of credit) against equity; variable rate	Minimal or $0; small annual fee common	You want flexible draw access and don't want to disturb a low first-mortgage rate (HELOCs averaged ~7.25% in Jan 2026 per Bankrate)
Home equity loan	Second loan, fixed rate, lump sum	Low; sometimes lender-paid	Fixed-rate lump sum without refinancing the first mortgage (~7.56% avg Jan 2026)
Mortgage recast	Lump sum to principal; lender recalculates payment at existing rate/term	Small flat fee (often ~$250) — no closing costs	You have a low locked-in rate and a windfall; want lower payment without losing the rate
FHA Streamline refi	Refi from FHA to FHA; no appraisal, no income/credit verify (non-credit-qualifying option)	Reduced; some lender fees still apply	You already have an FHA loan and current rates are lower
VA IRRRL	VA-to-VA streamline; no appraisal typical	Reduced; can roll into loan	VA loan holder with 210+ days seasoning, 6 on-time payments, no 30-day late in last 12 months, break-even within 36 months

Break-Even Worked Example

Input	Your loan today	New loan
Balance	$300,000	$300,000 (rate-and-term refi)
Rate	7.50%	6.50%
Term remaining / new	27 years	30 years
Monthly P&I	~$2,098	~$1,896
Closing costs	—	$7,500 (2.5% of loan)

Monthly savings: $2,098 − $1,896 = $202/month. Break-even: $7,500 ÷ $202 ≈ 37 months (just over 3 years). Net 30-year savings if you stay: roughly $65,000 less interest paid, offset by extending the payoff 3 years. If you plan to sell in 4 years or less, this refi barely pays for itself. If you'll stay 10+ years, it's a clear win — and shortening to a 15- or 20-year term at a similar rate would save substantially more interest.

Frequently Asked Questions

What is the break-even formula on a refinance?

Closing costs ÷ monthly payment savings = break-even months. Example: $6,000 closing costs and $250/month savings → 24 months to break even. The calculator does this math automatically and adds nuance most quick formulas skip: how much principal you'd have paid down under each loan, the opportunity cost of paying closing costs upfront, and the effect of extending or shortening the term. Stay past break-even and the refi pays; sell before it and you lost money on the transaction.

Do I really need a 1% rate drop to refinance?

No — that's the 1980s-90s rule when closing costs were 4-6% and processing took months. Today, with closing costs commonly 2-5% and online lenders competing on fees, a 0.5-0.75% drop can pay back inside 36 months on loans above ~$200K. The right question isn't "how big is the rate drop" but "when do I break even and will I stay past that month." Run the calculator with your actual numbers before applying the rule of thumb.

How much are refinance closing costs?

Typically 2-5% of the loan amount (Bankrate and LendingTree both cite this range; Rocket Mortgage cites 3-6%). On a $300,000 refi, expect $6,000-$15,000. Major line items: lender origination (0.5-1.5%), appraisal ($500-$800), title insurance and search (often the biggest single line; varies by state), recording fees, prepaid escrow for taxes and insurance, and any discount points you buy to lower the rate. Your lender's Loan Estimate — required within 3 business days of application under the TILA-RESPA rule — itemizes every fee.

What's the difference between a recast and a refinance?

A refinance replaces your loan entirely — new rate, new term, new closing costs, new credit pull. A recast keeps the existing loan: you make a large lump-sum principal payment, the lender recalculates (re-amortizes) the monthly payment over the remaining original term at the original rate, and charges a small flat fee (often around $250). Recasts win when you have a low locked-in rate (3-4% from 2020-21) and a windfall — refinancing into a 2026 rate of 6.5% would cost you more in interest than the recast saves. Refinancing wins when current rates are below your rate, or you need to change the term or take cash out. Not all lenders allow recasts; FHA, VA, and USDA loans generally cannot be recast.

Cash-out refi vs. HELOC vs. home equity loan — which should I pick?

It depends on whether you want to disturb your first mortgage. Cash-out refi replaces the whole loan — bad idea if you have a 3% rate from 2021 (you'd reset to 6.5% on the whole balance). HELOC is a separate variable-rate line of credit on top of your existing mortgage (averaged ~7.25% in January 2026 per Bankrate's tracking) — best for flexible draws over time. Home equity loan is a separate fixed-rate lump sum (7.56% avg, same source) — best when you want predictable payments on a one-time expense. If your first mortgage is at or above current rates, cash-out is usually cheapest because first-lien rates beat second-lien rates by 1-1.5 percentage points.

Will I qualify for an FHA Streamline or VA IRRRL?

FHA Streamline requires that your current mortgage be an FHA loan and that the refi produce a "net tangible benefit" — usually a lower rate or lower combined payment (principal + interest + MIP). Under the non-credit-qualifying option, the lender doesn't verify income, employment, or credit, and no appraisal is required. VA IRRRL (Interest Rate Reduction Refinance Loan) requires an existing VA loan, at least 210 days since the first payment due date, 6 consecutive on-time payments, no 30-day late payments in the past 12 months, and a break-even within 36 months. Most lenders skip income, employment, and appraisal requirements on IRRRLs. Both programs slash paperwork and closing costs vs. a conventional refi, which is why they exist.

Is refinance interest tax-deductible?

For a rate-and-term refi, the new loan is treated as home acquisition debt up to the balance of the old loan just before refinancing — interest is deductible subject to the IRS Publication 936 acquisition-debt limits ($750,000 for loans taken out after December 15, 2017; $1 million grandfathered for loans taken out between October 14, 1987 and December 15, 2017). For a cash-out refi, only the cash-out portion used for capital home improvements (substantial improvements that add value, extend life, or adapt the home) remains deductible — cash used for credit-card payoff, college tuition, or a car is not deductible interest. Refinance points are generally amortized over the life of the loan, not deducted in full the year paid, except for points on the portion used to substantially improve the home. Confirm with a CPA; tax rules change.

How does rolling closing costs into the loan change the math?

It moves the costs from your bank account to your loan balance — you still pay them, plus interest on them for the full new term. Rolling $7,500 of closing costs into a 30-year loan at 6.5% means you'll actually pay about $17,000 over the life of the loan for those costs. The break-even month extends because monthly savings now have to overcome a higher principal balance. Rolling makes sense if you genuinely don't have the cash and want to refinance anyway; pay upfront if you can — the lifetime savings are noticeably higher.

What's "no-closing-cost refinance" — is it really free?

No. The lender either charges a higher interest rate (lender credit covers the closing costs) or rolls the costs into the loan. PNC, Chase, and most major lenders disclose this explicitly. The right way to compare is to ask for two Loan Estimates from the same lender — one with closing costs paid, one "no-cost" — and run both through the break-even calculator. The "no-cost" version usually wins for borrowers who'll move within 5 years; the standard version wins for borrowers who'll stay 7+ years.