How much does it cost to refinance a mortgage?

Closing costs for a refinance typically run 2-5% of the loan amount, or $3,000-$6,000 on a $280,000 mortgage. This includes appraisal fees, title insurance, origination fees, and other charges. Some lenders offer 'no-closing-cost' refinances by rolling costs into a slightly higher rate.

Should I refinance to a shorter term?

Refinancing from a 30-year to a 15-year mortgage means higher monthly payments but significantly less total interest. If you can afford the higher payment, you'll save tens of thousands in interest and build equity faster. The calculator lets you compare different term lengths.

Does refinancing reset my mortgage?

Yes — refinancing creates a new loan with a new term. If you've paid 5 years of a 30-year mortgage and refinance into a new 30-year, you're now paying for 35 years total. Consider refinancing into a shorter term to avoid extending your payoff date.

Mortgage Refinance Calculator

Q: When does it make sense to refinance?

Refinancing typically makes sense when you can lower your rate by at least 0.75-1%, plan to stay in the home past the break-even point, and closing costs are reasonable. The break-even point is when your monthly savings exceed the closing costs — this calculator shows you exactly when that is.

Should you refinance? See your monthly savings and break-even point.

Current mortgage

Current loan balance

Current rate

New rate

Remaining term

New term

Closing costs

Typical: $2,000-$6,000

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How to Use This Calculator

Loan balance

Enter your current remaining balance — not the original loan amount. You can find this on your latest mortgage statement or online portal.

Current rate & new rate

Enter your current interest rate and the new rate you've been offered or expect to qualify for. The calculator instantly shows your new monthly payment, monthly savings, and total savings over the life of the loan.

More Options

Expand "More Options" to adjust the remaining term on your current mortgage, choose a new loan term (e.g., switch from 25 years remaining to a new 30-year or 15-year loan), and enter closing costs. Closing costs are subtracted from total savings and used to calculate your break-even point.

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The Formula

Monthly mortgage payments use the standard annuity formula. The calculator computes both your current and new payment, then compares them.

M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]

where M = monthly payment, P = loan balance, r = monthly interest rate, n = number of payments

Key metrics

Monthly Savings = Old Payment − New Payment

Break-even = Closing Costs ÷ Monthly Savings

Total Savings = (Old Total Payments) − (New Total Payments) − Closing Costs

Break-even tells you how many months it takes for the monthly savings to recoup your closing costs. Total savings is the net benefit over the full life of the new loan, after subtracting closing costs.

Example

Kevin — refinancing to a lower rate

Kevin has a $280,000 remaining balance at 7.5% with 25 years left. He's been offered 6.0% on a new 30-year loan with $3,000 in closing costs. Should he refinance?

Current mortgage

Remaining balance$280,000

Current rate7.5%

Remaining term25 years

Current payment~$2,070/mo

After refinancing

New rate6.0%

New term30 years

New payment~$1,679/mo

Monthly savings~$391/mo

Closing costs$3,000

Break-even~8 months

Total savings~$57,000

Kevin saves about $391 per month and recoups closing costs in under a year. Over the life of the loan, he saves roughly $57,000 — even after paying $3,000 in closing costs and extending his term by 5 years.

FAQ

When does it make sense to refinance? ▼

The general rule is to refinance when the new rate is at least 0.5–1% lower than your current rate and you plan to stay in the home past the break-even point. Calculate your break-even — that's the number of months it takes for monthly savings to cover closing costs. If you'll stay in the home longer than that, refinancing is likely worth it. Also consider your remaining term: if you only have a few years left, the savings may be minimal.

What are typical closing costs for a refinance? ▼

Refinancing closing costs typically range from 2–5% of the loan balance. On a $280,000 loan, that's $5,600–$14,000. Common fees include appraisal ($300–$600), title insurance, origination fees (0.5–1% of the loan), and recording fees. Some lenders offer "no-closing-cost" refinances where the costs are rolled into the loan or offset by a slightly higher interest rate. Always compare the total cost, not just the rate.

Should I refinance to a shorter or longer term? ▼

It depends on your goals. A shorter term (e.g., 15 years) means higher monthly payments but significantly less interest over the life of the loan — and usually a lower rate. A longer term (e.g., 30 years) reduces your monthly payment, freeing up cash flow, but you'll pay more in total interest. If your main goal is lowering the monthly payment, go longer. If you want to pay off the house faster and save the most money overall, go shorter.

What is a cash-out refinance? ▼

A cash-out refinance replaces your current mortgage with a larger loan, and you pocket the difference in cash. For example, if your home is worth $400,000 and you owe $280,000, you might refinance for $320,000 and receive $40,000 in cash. This can be useful for home improvements, debt consolidation, or other large expenses. The trade-off is a larger loan balance, potentially higher payments, and you're converting home equity into debt. Rates on cash-out refinances are typically slightly higher than rate-and-term refinances.

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