Mortgage Refinance Calculator
A lower monthly payment is not the same as a cheaper loan. Refinancing into a fresh thirty-year term almost always lowers the payment and frequently raises the total interest. This shows both, so the trade is visible.
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Break-even is the first test
Refinancing costs money up front. Divide those costs by the monthly saving and you get the number of months before the refinance has paid for itself. If you might move or refinance again before then, the deal loses money regardless of how much better the rate looks.
The term reset is where the cost hides
Someone eight years into a thirty-year mortgage who refinances into a new thirty-year term has just added eight years of payments. The monthly figure falls, sometimes substantially, while the total interest can rise even at a materially lower rate. The verdict line above flags exactly this case.
Refinancing into a term that matches the years remaining preserves the benefit of the lower rate without extending the loan. The payment saving is smaller, and the total saving is real.
Rolling the costs in is not free
Adding closing costs to the loan removes the cash hurdle and means you finance them for the whole term. It also makes break-even look instant, which is misleading. Both options are here so the difference is visible.
What else to check
Whether the new loan carries a prepayment penalty, whether PMI would be reintroduced if your equity is under twenty percent, and whether a no-closing-cost offer simply buys a higher rate. That last one is common: the cost has not disappeared, it has moved into the rate.
Frequently asked questions
When is refinancing worth it?
When you will stay past the break-even point and the new loan does not extend the term so far that total interest rises. A rate improvement of around three quarters of a point is a common rough threshold, though it depends on the balance and costs.
Does refinancing reset my mortgage?
It replaces the old loan with a new one on a new term. Choosing a term equal to the years you have left avoids restarting the clock.
What are typical refinance closing costs?
Commonly around two to five percent of the loan amount, covering origination, appraisal, title and recording fees.
Should I roll the costs into the loan?
It preserves cash but means paying interest on the fees for the whole term. If you have the cash and will keep the loan a long time, paying up front usually costs less.