Monthly savings, break-even point, and lifetime interest — instant results as you type.
Refinancing replaces your existing mortgage with a new one — ideally at a lower rate, a shorter term, or both. The central question is whether the savings justify the upfront cost. This calculator answers that with three numbers: your monthly savings, your break-even, and the lifetime interest delta.
Your monthly savings is simply your current payment minus your new payment. Both payments are calculated using the standard amortization formula: Payment = P × r(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan balance, r is the monthly rate, and n is the number of payments. Every cent of the savings is the gross benefit you receive each month from the lower rate or shorter term.
The break-even point is closing costs divided by monthly savings. If you pay $6,000 in closing costs and save $278 per month, your break-even is about 21.6 months. Until you reach that point, the costs are not yet paid back. After it, every month is pure savings. If you sell or refinance before the break-even, you lose money on the deal.
A few scenarios worth noting: if your new rate is the same as your current rate but your term is shorter, your payment goes up but your lifetime interest drops significantly — there is no break-even in the monthly savings sense, but the trade-off may still be worthwhile for the interest savings. This calculator shows both dimensions.
The lifetime interest comparison shows total interest paid on both loans. This number is heavily influenced by term length. Refinancing a 25-year remaining balance into a 30-year loan at a lower rate can produce monthly savings but actually cost more in lifetime interest because you are adding 5 extra years of payments. The result box flags this caveat when your new term is longer than your remaining term. For an apples-to-apples comparison, enter the same term in both fields.
Three situations where refinancing does not make financial sense: (1) you plan to sell before the break-even; (2) the new rate is higher than your current rate — the calculator shows the payment increase with no break-even; (3) you are already in the second half of your term and have paid off most of the interest front-loading — starting a new 30-year loan restarts the amortization schedule and can cost more in total interest than staying the course.
When you refinance, one of the most consequential decisions you make is the new term. A 15-year mortgage and a 30-year mortgage on the same loan amount at the same rate produce very different monthly payments and very different total interest costs. The right choice depends on your cash flow, your timeline, and your overall financial position.
A 15-year loan always has a higher monthly payment than a 30-year loan, all else equal. With a $300,000 balance at 5.5%, the 15-year payment is roughly $2,451 per month versus $1,703 on a 30-year. That is $748 more per month — but you own the home outright in half the time. The higher payment forces discipline: you are building equity aggressively and cannot easily overspend your budget.
The total interest difference is enormous. On the example above, the 30-year loan costs over $170,000 more in interest over its life. That is not a trivial number — it is the equivalent of an entirely separate purchase. However, that math assumes you hold both loans to term. If you plan to sell in 7 years, the difference in total interest paid is far smaller, and the lower payment of the 30-year loan may free cash for investments or other priorities.
The 30-year term makes more sense when: you are self-employed or have variable income and need the flexibility of a lower required payment; you are investing the difference and earning a return that exceeds the mortgage rate; or you plan to sell within 5–10 years, limiting the compounding disadvantage. Some financial planners argue that liquid reserves (emergency fund, retirement contributions) are worth more than aggressive equity build-up, particularly when mortgage rates are low.
The 15-year term wins when: eliminating debt before retirement is a priority; you are disciplined enough to lock into the higher payment without it creating cash-flow stress; or you are in a period of high rates where refinancing soon is unlikely and every dollar of interest matters. Banks typically offer 15-year mortgages at a lower rate than 30-year loans, widening the savings further.
Use the calculator above with both 15 and 30 entered as the new term to see the exact numbers for your situation. The break-even with a 15-year refi will look worse on paper — higher payment, less monthly savings — but the lifetime interest box tells the rest of the story.
If your goal is simply a lower monthly payment, refinancing is not your only option. A mortgage recast does the same job in certain situations — for far less money and without resetting your term.
A recast (also called a re-amortization) is when you make a large lump-sum payment toward your principal and then ask your lender to recalculate your monthly payment based on the reduced balance. Your interest rate stays the same. Your remaining term stays the same. Your lender charges a flat administrative fee — usually $200 to $500 — rather than the $3,000–$15,000 in closing costs that come with a full refinance.
A recast is the better choice when: you have a large lump sum (inheritance, bonus, equity from a sold property) and want to deploy it immediately; your current rate is already competitive and the lender does not offer a meaningfully lower one; or you are late in your loan term and do not want to restart amortization. The break-even on a recast is essentially immediate — the $250 fee is recovered in the first month of savings.
A refinance wins when: your current rate is significantly above market — the rate reduction alone justifies the closing costs; you want to change your term (the recast cannot do this); or you want to switch from an adjustable rate to a fixed rate. If the difference between your current rate and the new rate is 1.5% or more, the monthly savings from the rate drop typically outweigh the closing costs within 2–3 years.
The simplest way to decide: if you have a lump sum available and your rate is already reasonable, model a recast first — the near-zero break-even almost always wins on pure math. If your rate is above current market by a meaningful margin, use this calculator to find the refinance break-even and compare it against how long you plan to stay in the home.