AtlasCalcsUtility Calculation Suite
2026-09-21 7 min read

Mortgage Refinance Calculator

The net saving from refinancing after costs for a mortgage. Live calculator with worked steps, charts.

Calculator

Current Loan Balance Help
$

The payoff balance today, not the original amount borrowed.

Current Interest Rate(%)
%
Remaining Term Today(years)
years
New Interest Rate(%)
%
New Loan Term(years)
years
Closing Costs
$
Advanced options (1)
Cash Taken at Closing
$

This refinance calculator runs on the standard amortisation model: interest is charged on the outstanding balance each month, and anything extra you enter is applied to principal immediately.

Amortization schedule

Balance Interest Payment
View:
YearInterestPrincipalEnding Balance
1$14,079.67$3,002.67$236,997.33
2$13,897.64$3,184.69$233,812.64
3$13,704.58$3,377.76$230,434.89
4$13,499.81$3,582.52$226,852.37
5$13,282.63$3,799.70$223,052.67
6$13,052.29$4,030.05$219,022.62
7$12,807.98$4,274.35$214,748.27
8$12,548.86$4,533.47$210,214.79
9$12,274.03$4,808.30$205,406.49
10$11,982.54$5,099.79$200,306.70
11$11,673.38$5,408.95$194,897.75
12$11,345.48$5,736.85$189,160.90
13$10,997.70$6,084.63$183,076.27
14$10,628.84$6,453.49$176,622.78
15$10,237.62$6,844.71$169,778.07
16$9,822.68$7,259.65$162,518.42
17$9,382.59$7,699.75$154,818.67
18$8,915.81$8,166.52$146,652.15
19$8,420.74$8,661.59$137,990.56
20$7,895.66$9,186.67$128,803.89
21$7,338.75$9,743.58$119,060.31
22$6,748.07$10,334.26$108,726.05
23$6,121.59$10,960.74$97,765.31
24$5,457.13$11,625.20$86,140.10
25$4,752.39$12,329.94$73,810.16
26$4,004.92$13,077.41$60,732.75
27$3,212.14$13,870.19$46,862.56
28$2,371.31$14,711.02$32,151.54
29$1,479.50$15,602.83$16,548.71
30$533.62$16,548.71$0.00

Results

Critical

Net Interest Position After Costs

-$17,186

Old interest minus new interest minus costs.

Payment Before

$1,737.79/month

Payment After

$1,423.53/month

Monthly Payment Change

-$314

New Loan Amount

$240,000

Interest on the Current Loan

$260,484

Interest on the New Loan

$272,470

Closing Costs

$5,200

Break-Even

16.5 months

New Payoff Date

360 payments from today

Live results update as you type — currently showing net interest position after costs of -$17,186 on 12 payments a year. Replace the defaults with your own quote for an exact comparison.

Visualizations

Remaining Cost by Option

260,484Keep current loan
277,670Refinance

Refinance Outcome

Interest avoided0%
Costs paid100%
Net position0%

Formula

A refinance replaces the balance with a new loan at the new rate and term. The saving per month is the difference between the old payment and the new one (plus the term effect), and the break-even is closing costs divided by that saving. Below 24–36 months of expected holding, most refinances do not pay.

See the worked steps below for the exact relationship used

Variables

SymbolNameUnitDescription
AAmountcurrencyBalance or amount involved in the calculation
iPeriodic ratedecimalAnnual rate ÷ periods per year
nNumber of periodscountTerm in payments

Explanation

A refinance replaces the balance with a new loan at the new rate and term. The saving per month is the difference between the old payment and the new one (plus the term effect), and the break-even is closing costs divided by that saving. Below 24–36 months of expected holding, most refinances do not pay.

Step-by-Step Calculation

Follow each step to understand how the result is calculated from your inputs.

Step 1

Price what is left on the current loan at its rate.

Interest remaining = P × n − balance
Balance:$240,000
Rate:7.10%
Remaining:24 years
Result: $260,484 of remaining interest
Step 2

Price the refinanced balance at the new rate and term.

P₂ = (balance + cash out) × i₂ ÷ (1 − (1 + i₂)^−n₂)
New rate:5.90%
New term:30 years
Result: $1,423.53 per month on $240,000
Step 3

Net the interest change against the closing costs.

Net = old interest − new interest − costs
Intermediate: $260,484 − $272,470 − $5,200
Result: -$17,186 lost
Final Answer
-$17,186

Worked Examples

See how the calculator works with different scenarios.

Scenario

The mortgage refinance calculator run on the values above, showing the full calculation path rather than only the answer.

Inputs

Balance:240000
Current Rate:7.1

Calculation

1. Price what is left on the current loan at its rate. → $260,484 of remaining interest 2. Price the refinanced balance at the new rate and term. → $1,423.53 per month on $240,000 3. Net the interest change against the closing costs. → -$17,186 lost

Result

Net Interest Position After Costs: -$17,186

Interpretation

Refinancing $240,000 from 7.10% to 5.90% over 30 years costs $17,186 after $5,200 of costs.

Understanding Your Result

Your Result: Net Interest Position After Costs: -$17,186

Typical range: Refinances usually pencil out at a 0.75+ point improvement with break-even under 36 months; cash-out raises the amount financed, so judge it on the total.

What This Means

A refinance replaces the balance with a new loan at the new rate and term. The saving per month is the difference between the old payment and the new one (plus the term effect), and the break-even is closing costs divided by that saving. Below 24–36 months of expected holding, most refinances do not pay.

Why It Matters

Refinancing $240,000 from 7.10% to 5.90% over 30 years costs $17,186 after $5,200 of costs.

Professional Interpretation

Refinancing $240,000 from 7.10% to 5.90% over 30 years costs $17,186 after $5,200 of costs.

How this is calculated

A refinance replaces the balance with a new loan at the new rate and term. The saving per month is the difference between the old payment and the new one (plus the term effect), and the break-even is closing costs divided by that saving. Below 24–36 months of expected holding, most refinances do not pay.

What drives the result

A refinance replaces the balance with a new loan at the new rate and term. The saving per month is the difference between the old payment and the new one (plus the term effect), and the break-even is closing costs divided by that saving. Below 24–36 months of expected holding, most refinances do not pay.

Recommendations

  • •Compare the term honestly: resetting to 30 years on a 20-year-old loan can add interest even at a lower rate.
  • •Cash-out funds are spent money at mortgage rates for the full term — use them for value-adding purposes only.

Educational Content

Introduction

Refinancing trades today’s rate and payment for a new set, against the closing costs of doing it. The analysis is mechanical: interest saved per month versus cost, and how many months it takes for the saving to pay back the cost.

Concept Explanation

A refinance replaces the balance with a new loan at the new rate and term. The saving per month is the difference between the old payment and the new one (plus the term effect), and the break-even is closing costs divided by that saving. Below 24–36 months of expected holding, most refinances do not pay.

Applications

▸Cutting the rate when it has fallen 0.75–1.0 points below your note rate
▸Resetting an adjustable loan to fixed before the first reset
▸Removing PMI or FHA MIP by restructuring
▸Extracting equity deliberately (cash-out) at a sensible rate

Benefits

  • •Quantifies the monthly saving and the break-even month
  • •Shows the term effect — a lower payment can still mean more total interest
  • •Compares cost and no-cost structures directly
  • •Tests cash-out scenarios without committing

Limitations

  • •Assumes you hold the new loan long enough for the saving to exceed costs
  • •Closing costs are estimates until the loan estimate is issued
  • •Resetting to a fresh 30-year term can raise lifetime interest even at a lower rate
  • •Credit and appraisal outcomes can change the pricing after application

Best Practices

  • •Compute break-even before applying, and again with the real loan estimate
  • •Consider a shorter term — the payment may barely rise while the saving soars
  • •Compare at least three lenders; refinance spreads vary widely
  • •Time the lock so per-diem interest and escrow overlap do not double-charge

Common Misconceptions

Myth: A 1% rate drop always pays
Truth: On small balances or short remaining terms the monthly saving may never cover the costs.
Myth: Refinancing resets nothing
Truth: It replaces the term; the amortisation clock restarts at the new term length.

Practical Tips

  • •Compute break-even before applying, and again with the real loan estimate
  • •Consider a shorter term — the payment may barely rise while the saving soars
  • •Compare at least three lenders; refinance spreads vary widely

Common Mistakes

A 1% rate drop always pays
On small balances or short remaining terms the monthly saving may never cover the costs.
Refinancing resets nothing
It replaces the term; the amortisation clock restarts at the new term length.

Assumptions

This calculator makes the following assumptions to provide estimates:

Figures as entered: The result follows directly from the values you supplied.

Limitations

Be aware of these limitations when using this calculator:

Limitation: Assumes you hold the new loan long enough for the saving to exceed costs
Limitation: Closing costs are estimates until the loan estimate is issued
Limitation: Resetting to a fresh 30-year term can raise lifetime interest even at a lower rate
Limitation: Credit and appraisal outcomes can change the pricing after application

Frequently Asked Questions

Answers to common questions about this calculator.

Who uses the mortgage refinance calculator?
It is used by home buyers comparing mortgage offers, by owners weighing a refinance or equity move, and by loan officers and advisers sanity-checking a payment, ratio or fee structure. It sits in the Refinance group of the Mortgage & Home Finance section of Atlascalcs.
How accurate is the mortgage refinance calculator?
Every figure follows directly from the inputs using standard amortisation mathematics, so it is accurate to the quality of the values you enter. Lenders round payments and apply their own day-count conventions, so expect small differences against a formal statement or payoff quote.
How current are the rates and thresholds used here?
The calculator uses the figures you enter, so update the rate to your actual offer or current market quote. Ratio thresholds, poverty guidelines and programme rules reflect the conventions described in the references and change periodically.
Does rounding change the results?
Every calculation runs on full precision and rounds only for display. Lenders round payments to the nearest cent or dollar, so expect a small difference between these figures and a formal statement or payoff quote.
Should I use the payment or the total cost to compare offers?
Use the payment to judge cash flow and the finance charge or APR to judge cost. When two offers differ on both, the all-in cost over the period you expect to hold the loan is the decisive measure.
Can I use this calculator for a business or commercial loan?
Yes. The payment, amortisation, ratio and cost calculators apply the same amortisation mathematics to commercial loans; the difference is in the fees, covenants and collateral rules, which you should enter explicitly.
What information should I have ready before applying?
Your exact rate and term, the fee schedule, any required add-ons, and your gross income and existing monthly obligations. With those five numbers every figure on this page can be tied back to a lender quote.

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Glossary

Technical terms used in mortgage calculations explained in plain language.

Principal
The amount borrowed, excluding interest and fees. Payments applied to principal reduce the balance and therefore future interest.
Amortisation
Repaying a debt through a schedule of payments that gradually shifts the split from interest to principal until the balance reaches zero.
APR (Annual Percentage Rate)
The yearly cost of credit expressed as a rate, including interest and most upfront finance charges.
Finance charge
The total dollar cost of credit, including interest and certain fees.

Authoritative References

Trusted sources and standards referenced by this calculator.

Applicable Standards

Level-payment (simple-interest) amortisation, payments assumed in arrearsAPR computed by discounting the actual payment stream to net proceedsDebt ratios computed on gross income for lender comparisonsMoney rounded for display only; all calculations run at full precision

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Page Information

Last Updated:

2026-09-21

Version:

2.0.0

License:

Free to use for educational and professional purposes.