Refinance Amortization Calculator

A refinance amortization calculatorcompares your current mortgage against a proposed refinance side by side — old payment versus new payment, monthly savings, the exact month you break even on closing costs, and how much interest you'd save (or lose) over the life of the new loan. Enter your current balance, rate, and remaining term alongside the new loan's rate, term, and closing costs — and tick whether those costs are added to the new loan or paid in cash — and the calculator runs both through the full month-by-month amortization formula instead of a shortcut rule of thumb, then shows the new loan's complete amortization schedule.

Refinance shoppers are almost always chasing a lower rate, but the rate alone doesn't tell you whether refinancing actually pays off. Every refinance costs money upfront — appraisal, origination, title work — and that cost has to be earned back through lower payments before the refinance is actually a win. The number that answers the question is your break-even month: closing costs divided by monthly savings. The worked example below walks through a real $320,000 loan refinancing from 7.25% to 6.25%, and shows why a full percentage-point rate drop doesn't automatically mean a fast payback — and why the term you pick for the new loan (a full 30-year reset versus matching your remaining years) can move your lifetime interest savings far more than the rate spread itself.

Homeowners deciding whether now is the right time to refinance use this tool first, before ever contacting a lender, to see whether a quoted rate would actually clear their own break-even bar. Loan officers and mortgage brokers use the same math to show clients real numbers instead of a generic "refinance if the rate drops a full point" rule, and anyone weighing a rate-and-term refinance against a cash-out refinance can model either scenario by adjusting the new loan balance below.

Why Break-Even Math Is the Right Question — Not Just "Is the Rate Lower"

A lower rate is necessary for a refinance to make sense, but it isn't sufficient. Every refinance costs money upfront — appraisal, origination, title work — and that cost has to be earned back through lower payments before the refinance is actually a win. The break-even month is the single number that tells you whether a given refinance is worth doing: closing costs ÷ monthly savings = months to break even. Everything else (the rate spread, the new term, whether you take cash out) only matters insofar as it changes that one calculation.

The other half of the question is one only you can answer: how long do you plan to stay in this loan? If you break even in 25 months but sell, move, or refinance again in 18 months, the refinance cost you money regardless of how attractive the new rate looked on paper. If you're confident you'll hold the loan for years past your break-even point, even a modest rate improvement can be worth pursuing. This is also why the old rule of thumb — "only refinance if the rate drops by a full percentage point" — is outdated: a large balance with a long timeline remaining can clear its break-even point on a much smaller rate improvement, while a small balance with a short remaining timeline might never break even even on a full-point drop. Run your own balance, timeline, and closing cost estimate through the calculator above instead of relying on a generic threshold.

Rate-and-Term Refinance vs. Cash-Out Refinance

The calculator above models a rate-and-term refinance: you're replacing your existing balance (plus rolled-in closing costs) with a new rate and/or term, without pulling any additional equity out of the home. This is the version most people mean when they say "I want to refinance to a lower rate," and it's the version where the break-even math above applies most directly.

A cash-out refinance is a different decision: you borrow more than your current balance and take the difference in cash at closing, using your home's equity to fund a renovation, pay off higher-rate debt, or cover another expense. Cash-out refinances typically carry a slightly higher rate than a rate-and-term refinance and are usually capped around 80% loan-to-value, since the lender is taking on more risk against a smaller equity cushion. You can model a cash-out scenario in the calculator above by entering your current balance plus the cash amount you want to pull out as the "Remaining Balance" field — the break-even math works the same way, but the monthly payment increase (rather than decrease) needs to be weighed against what you'd otherwise pay to borrow that money through a personal loan or credit card.

When Refinancing Resets Your Amortization Clock

Every amortization schedule front-loads interest — the first payments on any new loan are mostly interest because the balance is at its highest point. When you refinance into a fresh 30-year term, you restart that front-loaded curve, even if you'd already ground through several years of a previous schedule and were well into the principal-heavy back half. That's the hidden cost behind an attractive lower payment: a smaller monthly number can still mean paying interest for longer in total.

Go back to the worked example: refinancing the $320,000 balance into a new 30-year term produced a $246/month savings, a 25-month break-even, and $13,503 in lifetime interest savings. Now run the same current loan and same 6.25% new rate, but match the new term to the 27 years actually remaining instead of resetting to 30. The new payment comes to $2,085/month — still a real $168/month savings, just a smaller one — and the break-even stretches to 36 months (three years) instead of 25. But the lifetime interest savings jumps to roughly $60,451, more than four times the reset-to-30 scenario ($54,451 counting every payment, including the rolled-in costs), because you're not re-stretching the payoff timeline back out.

The takeaway: a bigger monthly payment drop isn't automatically the better deal. If your priority is minimizing total interest paid rather than maximizing monthly cash flow, ask your lender for a new term that matches your remaining years rather than defaulting to a fresh 30-year schedule — many lenders can offer 20-, 25-, or custom-term refinances, not just 15 or 30. Use the "New Term" selector in the calculator above to compare a 30-year reset against a shorter matching term for your own balance, and see what a full reset actually looks like month by month on our 30-year mortgage amortization schedule page.

Closing Costs: What's Typically Included and What They Cost

Refinance closing costs cover roughly the same categories as a purchase loan: a loan origination fee, an appraisal fee, a title search and title insurance policy, recording fees, a credit report fee, and often prepaid interest or an escrow account setup if your lender requires one. Discount points — an optional upfront fee paid to lower your rate further — can also be part of the total if you choose to buy them down.

According to the Consumer Financial Protection Bureau, median total loan costs on home-purchase mortgages reached nearly $6,000 in 2022, up 21.8% from 2021. That figure is for purchase loans, not refinances, though the fee categories largely overlap. Your own total will depend on your loan size, state, and lender, so treat any published average as a starting estimate, not a quote, and ask your lender for an itemized Loan Estimate before committing.

Watch for "no-cost" or "no-closing-cost" refinance offers: as the CFPB explains, those costs don't disappear, they're either folded into a higher interest rate or added directly onto your loan balance. Either approach can still be the right call depending on how long you plan to keep the loan, but it's a trade you're making, not a discount you're getting — run the "no-cost" rate through the calculator above against a version with upfront closing costs to see which actually costs less for your expected timeline.

Refinance vs. Recast vs. Extra Payments: When Each Makes More Sense

These three tools solve overlapping problems in different ways, and picking the wrong one costs you money in fees or interest you didn't need to pay:

• Refinance — replaces your loan with a new rate and/or term, at the cost of closing costs and a break-even period. Makes the most sense when market rates have dropped meaningfully below your current rate and you plan to keep the loan (or the home) well past your break-even month. Model your own break-even above.
• Recast— keeps your existing rate and loan exactly as they are; you make a lump-sum principal payment and the lender re-amortizes the now-smaller balance over your same remaining term, lowering your payment with no new closing costs and no credit check. Makes the most sense when your current rate is already at or below market and you've come into a lump sum (bonus, inheritance, home-sale proceeds). See the exact math on our mortgage recast calculator.
• Extra payments— no new loan, no lump sum required, no fees at all; you simply direct additional money toward principal each month (or whenever you have it). Slower to show dramatic results than a recast or refinance, but fully reversible — stop anytime with no penalty. Makes the most sense when you don't have a lump sum but do have some extra monthly cash flow. Model different amounts on our mortgage calculator with extra payments.

A quick heuristic: if your rate today is meaningfully above current market rates, refinance and check your break-even first. If your rate is already good and you just received a windfall, recast instead of refinancing to avoid closing costs and a credit pull. If you have no lump sum but some breathing room in your monthly budget, extra payments give you the most flexibility with the least commitment.

Methodology: How We Calculate These Numbers

Both loans in the comparison above are run through the same standard fixed-rate amortization formula used everywhere on this site: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the loan principal, r is the interest rate divided by 12, and n is the number of monthly payments. We generate a full month-by-month schedule for the current loan (over its remaining term) and a second full schedule for the proposed loan (principal plus any rolled-in closing costs, at the new rate and term), then compare the two: monthly savings is the difference in payment, break-even months is closing costs divided by monthly savings (rounded up to the next whole month), and the lifetime comparison adds up every remaining payment on each loan, plus the closing costs if you choose to pay them in cash rather than add them to the new balance. The interest figures quoted in the worked example are the difference in total interest across each schedule's full remaining life. Nothing here is approximated from a shortcut formula — every number comes from the same engine that powers the full monthly schedule on our mortgage amortization calculator.

For background on refinance mechanics, closing cost structures, and how "no-cost" offers actually work, see the Consumer Financial Protection Bureau's research on rising mortgage closing costs and its explainer on no-cost and no-closing-cost refinancing.