Refinance Calculator
Test whether refinancing pays by comparing the monthly saving against the closing costs, and find the exact month you break even.
Refinance Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Results are a model, not a quotation — an institution's own figures govern.
- Every input is an assumption; change one and the answer changes with it.
- Rounding is applied only at the display layer, so totals may differ by a cent from a statement that rounds each line.
In short: Refinancing pays when you hold the new loan past its break-even month, found by dividing total closing costs by the monthly saving. Cutting a $336,000 balance from 6.5% to 5.5% saves $215.98 a month, so $6,000 of costs breaks even in 28 months.
Formula
The test is a payback period, not a rate comparison. A lower rate that you do not hold long enough to recover the costs is a loss.
Worked Example
- Price the current payment. $336,000 at 6.5% over 360 months = $2,123.75.
- Price the new payment. Same balance at 5.5% over 360 months = $1,907.77.
- Find the saving. $2,123.75 − $1,907.77 = $215.98 per month.
- Divide by costs. $6,000 ÷ $215.98 = 27.8, so 28 months.
- Check lifetime. Total payments fall by $77,751.91, or $71,751.91 net of costs.
Analyst note. This example refinances 360 months into a fresh 360 months, so the comparison is clean. Refinancing a loan part-way through its term into a new 30-year schedule can raise lifetime interest even at a lower rate — always check the lifetime difference, not just the payment.
Strengths & Limits Of This Model
Where this engine is strong
- Runs entirely in your browser — no figure you type is transmitted or stored.
- Shows the full working, so every number can be traced and challenged.
- Free, unmetered and free of affiliate incentives.
Where it stops
- Generalised assumptions cannot capture every individual circumstance.
- Jurisdiction-specific rules and mid-year changes may not be reflected.
- A model output is not a substitute for a professional review of your position.
Practical Use Cases
Deciding whether a rate drop justifies the costs
The old rule of thumb was a full percentage point, which ignores both closing costs and how long you will stay. The break-even month is the only test that accounts for both.
Avoiding the reset trap
Refinancing seven years into a term back to a fresh 30 years returns you to the front-loaded part of the curve. Compare the interest figures here, and see the full schedule in the Loan Amortization Calculator.
Shortening the term instead of the payment
Refinancing into a shorter term often raises the payment while cutting lifetime cost dramatically. The change-in-payoff-time output makes that trade visible; compare against overpaying the existing loan with the Extra Payment Mortgage Calculator.
Methodology & Editorial Standards
Both payments are computed with the standard annuity formula on the current outstanding balance, so the comparison is like-for-like. The break-even month is total closing costs divided by the monthly saving, rounded up, which is the conventional payback test. Lifetime difference compares total payments on both schedules net of closing costs, and is reported separately because a lower payment achieved by extending the term frequently increases lifetime interest. The engine assumes costs are paid at settlement rather than rolled into the balance; rolling them in raises the new loan and lengthens the recovery. Cash-out refinancing is not modelled here. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Refinance Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
When is refinancing worth it?
When you will hold the new loan comfortably past the break-even month. Cutting $336,000 from 6.5% to 5.5% saves $215.98 monthly, so $6,000 of costs is recovered in 28 months. Staying five years makes it clearly worthwhile; moving in two does not.
Is the 1% rule reliable?
No, it is too crude. It ignores closing costs, the remaining term and your holding period. A 0.5% drop on a large balance with low costs can beat a 1.5% drop on a small balance with high costs.
What are typical refinance closing costs?
Usually 2 to 5% of the loan amount, covering origination, appraisal, title and recording. On a $336,000 refinance that is roughly $6,720 to $16,800, though lender credits can offset some of it in exchange for a slightly higher rate.
Does refinancing reset my loan term?
It does unless you deliberately choose a shorter one. Going from 23 years remaining back to a fresh 30 returns you to the front-loaded portion of the amortisation curve and can increase lifetime interest even at a lower rate.
Should I roll closing costs into the loan?
It preserves cash but increases the balance, so you pay interest on the costs for the life of the loan and the break-even point moves further out. Paying at settlement is cheaper if you have the liquidity.
What is a no-closing-cost refinance?
The costs are covered by the lender in exchange for a higher rate, or added to the balance. Nothing is free — you pay through the rate instead. It can suit borrowers who expect to move or refinance again fairly soon.
Can I refinance with little equity?
Conventional refinancing generally wants at least 20% equity to avoid mortgage insurance, though streamline programmes for FHA and VA loans have far looser requirements and often skip the appraisal entirely.
How does my credit score affect a refinance?
It sets the rate you are offered, and the difference between credit tiers can easily exceed the entire saving you are refinancing to capture. It is usually worth improving a borderline score before applying rather than after.
Is a cash-out refinance the same thing?
No. A cash-out refinance increases the balance to release equity, so the payment comparison here does not apply. It also usually carries a slightly higher rate than a straight rate-and-term refinance.
What if rates fall again after I refinance?
You can refinance again, subject to paying costs a second time and to any prepayment terms. This is exactly why break-even matters: serial refinancing only pays if each round is held past its own recovery point.
Does refinancing hurt my credit score?
Temporarily and modestly. The application generates a hard enquiry and the new account lowers your average account age. Rate-shopping enquiries within a short window are generally treated as a single event by scoring models.
Should I refinance to a shorter term?
If you can carry the payment, it is often the most valuable version of a refinance: you capture the lower rate and eliminate years of interest simultaneously. The change-in-payoff-time output here shows the effect directly.
Is this refinance calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.
Which currency does it use?
Amounts display in US$ accounting format, but the underlying mathematics is currency-agnostic. The result is identical in any currency, so simply read the figures in your own.
Why does a result show an em-dash?
An em-dash indicates the calculation is not defined for the inputs given — typically a division by zero or a value outside the valid domain. We show a dash rather than a misleading number.
How do I report an error?
Email apexconverter.praxiscalc@gmail.com with the tool URL, your exact inputs, the output received and the output you expected. Verified mathematical errors are patched within 72 hours.