Compare your current mortgage to a new offer — breakeven and lifetime savings.
Breakeven = closing costs ÷ monthly savings. Lifetime savings = total of remaining old payments minus total of new payments (and any out-of-pocket closing costs). A long breakeven only pays off if you stay in the home past it.
A mortgage is rarely a one-shot decision — rates move, your credit improves, your income grows, and a loan that was perfectly fine three years ago may now be the most expensive line item in your monthly budget. Refinancing replaces an existing mortgage with a new one, ideally at a lower rate or a shorter term, and the question every homeowner asks before signing is the same: will this actually save me money, and how long until it does? Two numbers carry the entire decision: the monthly savings (how much smaller the new payment is) and the breakeven point (how many months of those savings it takes to recoup the closing costs). Anyone who plans to stay in the home longer than the breakeven comes out ahead; anyone who sells or refinances again before reaching it has paid closing costs for nothing. This calculator runs both numbers for any combination of current loan, new offer, and closing-cost financing strategy, and shows the lifetime interest delta so you can also see whether stretching the term back out to 30 years secretly costs more than it saves.
The monthly payment on a fixed-rate amortizing mortgage is:
M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)
where P is the loan principal, r is the monthly rate (annual ÷ 12), and n is the total number of monthly payments. The calculator applies the formula twice — once to your current loan (using the remaining balance and the months left) and once to the new loan (using the balance plus any rolled-in closing costs and the new term). The headline numbers fall out as differences:
When monthly savings are zero or negative — for example, you are refinancing to shorten the term and accepting a higher payment in exchange — breakeven is undefined and the decision rests entirely on the lifetime-savings number.
The inputs split into two blocks. The current loan block needs the remaining balance, your current rate, and the months left on the existing loan. (If you only know the original term and the monthly payment, you can back into months remaining from your last statement; many lenders show it directly.) The new loan offer block needs the rate the new lender is quoting, the new term in years (10 / 15 / 20 / 25 / 30), the total closing costs, and a strategy for paying them — out of pocket at signing, or rolled into the new loan principal so they are amortized along with the rest. The Results panel returns six numbers and a chart: the current and new monthly payments, the monthly savings, the breakeven in months, the lifetime savings, and the total interest paid under each scenario, plotted as side-by-side bars so you can see at a glance whether the new loan is genuinely cheaper or just spreads the cost out further.
You took out a $250,000 thirty-year mortgage four years ago at 6.5 %. The remaining balance is now roughly $237,000 with 312 months left, and a lender is offering you 5.0 % on a new fifteen-year fixed with $4,000 in closing costs paid out of pocket. The current monthly payment is about $1,580. The new fifteen-year payment on $237,000 at 5.0 % is about $1,873 — that is higher than the current payment, so monthly savings here are negative and breakeven is undefined. But the lifetime view tells a different story: 312 × $1,580 = $492,960 versus 180 × $1,873 + $4,000 = $341,140. You are paying $293 more each month, but you finish 132 months earlier and save $151,820 in interest. Now reverse the example: same balance and rate, but a thirty-year refinance at 5.0 %. The new payment drops to about $1,272, monthly savings are $308, breakeven is $4,000 ÷ $308 = 13 months, and lifetime savings are $492,960 − (360 × $1,272 + $4,000) = $31,040. Same loan, same closing costs, totally different decision math.
Five errors trip up homeowners shopping for a refi. First, comparing the new note rate to the current one without including closing costs. A 1 % drop sounds dramatic but with $5,000 in costs and a planned move in two years, you may never reach breakeven. Second, restarting the amortization clock without realizing it. Refinancing a mortgage with 312 months left into a fresh 30-year loan adds 48 months of payments at the back end — your monthly may be lower but the lifetime cost can rise. Third, rolling closing costs into the new principal and treating that as "free." The costs are still being paid, just amortized at the loan rate over the term. On a 30-year refi at 5 % that turns $4,000 into roughly $7,700 of repaid principal+interest. Fourth, ignoring PMI reset rules — refinancing below 20 % equity often re-triggers private mortgage insurance, which adds 0.3 to 1.5 % of the loan amount per year on top of the new payment. Fifth, forgetting the prepayment penalty on the existing loan. Roughly 5 % of US conventional loans carry one in the first three years; a typical penalty is 1 to 3 % of the remaining balance and can wipe out the entire breakeven calculation.
In the United States, fixed-rate refinances dominate, with the standard 30-year fixed accounting for the bulk of the volume; the rate-and-term refinance variant (this calculator's primary use case) keeps the loan amount the same and only changes the rate or term. The cash-out refinance is a different animal — covered by the dedicated cash-out vs HELOC calc — where the new loan is larger than the old one and the difference is paid out as cash; the breakeven math also differs because the cash itself has utility. In the United Kingdom and Ireland, the equivalent practice is called remortgaging and almost always happens at the end of a 2- or 5-year fixed period rather than mid-term; the calculator's framework still applies, just with a much shorter "months remaining" input. In France, refinancing was historically rare because of high notarial costs and explicit prepayment penalties (typically capped at 3 % of remaining capital or 6 months' interest), but the 2014 Loi Hamon and 2018 Loi Bourquin loosened the loan-insurance side enough that many homeowners now refinance the insurance rather than the loan itself — a separate calculation. In Canada, the typical 5-year fixed term means refinancing usually waits for the renewal date to avoid the IRD (interest rate differential) penalty, which can be substantial. Whatever the jurisdiction, the question "how many months until I break even?" is the universal core of the decision.