Should I refinance my mortgage?

Both loans are priced with the same amortization formula: the fixed monthly payment that retires the balance over the term. Your current loan is priced over the years you have left, the new loan over its full term, and the difference is the monthly savings. Closing costs divided by those savings, rounded up to whole months, is the break-even: the month the refinance stops being underwater. At the defaults, $236 a month against $10,500 of costs puts it 45 months out, around May 2030.

Break-even barely moves with the size of the loan, because both sides scale together: a bigger balance saves more per month and costs proportionally more to close. What moves it is the size of the rate drop and the closing costs. At the defaults, a drop to 6.5% instead of 6.65% pulls break-even from 45 months to 40; closing at 2% instead of 3.5% pulls it to 26.

Break-even answers one question: how long you must keep the new loan before the savings cover the costs. It says nothing about whether the refinance wins over the life of the loan. That is the next section, and it is where the payment-only view goes wrong.

A refinance usually restarts the clock. At the defaults you have 27 years left, and the new loan runs 30, so the new loan is still 36 months from payoff on the day the old one would have died. The honest comparison holds the horizon fixed: over the next 27 years, keeping the loan costs $700,553 and ends at zero, while refinancing costs $10,500 to close, $623,990 of payments, and still owes $62,697 at your old payoff date, $697,187 in all. At the defaults the refinance squeaks out $3,366 ahead on that measure, because the rate drop is nearly a full point. Run both loans to their own finish lines instead and the refinance pays $703,822 against $700,553 for keeping: a lower payment, and more money out the door.

Shrink the rate drop or the years left and the same arithmetic turns hard against the reset. With 20 years left, the fresh 30-year loan saves $491 a month and breaks even in 22 months, yet keeping the old loan comes out $61,164 ahead over those 20 years. The break-even number and the horizon number disagree because they answer different questions, and the second one is the one your net worth experiences.

The fix is the term control above: price the same rate drop over a term that matches your remaining years. In the 20-year case, the matched term saves only $153 a month, but refinancing then wins the horizon by $26,337. The small saving is real; the large one was borrowed from your own future.

A refinance is a new mortgage, with a new mortgage's fees: origination, appraisal, title search and insurance, and recording. Freddie Mac puts typical closing costs at 2% to 5%; that range is quoted against a home's purchase price, and this calculator applies it to the loan balance as a working simplification, which is conservative whenever you owe less than the home is worth.

At the default $300,000 balance, the range runs $6,000 to $15,000, and the 3.5% default lands at $10,500. The spread matters more than it looks: at 2% the default refinance breaks even in 26 months and wins the horizon by $7,866; at 5% break-even stretches to 64 months and keeping the loan comes out $1,134 ahead. Shopping the fees is worth real money, and a "no-closing-cost" refinance is the same fees moved into the rate or the balance, not their absence.

Your quote. The default new rate is a national survey average for a 30-year fixed mortgage; actual offers depend on your credit, your equity, and the lender. It also assumes you refinance the balance as it stands: cash-out refinancing, discount points bought at closing, and fees rolled into the new balance all change the arithmetic, and none are modeled here.

The comparison is fixed-rate against fixed-rate. An adjustable-rate mortgage, on either side, has no single lifetime cost to compare. Mortgage interest deductions, escrow, taxes, and insurance are outside both loans and outside this page. And the model compares dollars, not dollars discounted over time; over decades, inflation makes the later payments cheaper than the early ones in a way a flat sum does not capture.

This is a rate-and-term refinance model. It answers whether swapping one fixed loan for another is worth the fees over your horizon. Your lender's Loan Estimate is the binding document; this page is for understanding it before you sign one.

This calculator is built to be used without a browser. Every input is a query parameter on this page, and the same parameters on the JSON twin return the complete answer as a document.

GET /tools/refinance.json?balance=300000&currentRate=7.5&yearsLeft=27&newRate=6.65

The response carries inputs after parsing and clamping, result with both payments, the monthly savings, closing costs, breakEvenMonths (null when the payment does not drop), the keep-versus-refinance horizon totals, lifetime interest on each path, plus sensitivity tables by new rate and new term, drivers ranked by effect with a plain sentence each, assumptions that say for every field whether you supplied it and which source the default came from, sources with URLs and as-of dates, warnings, a disclaimer, and in tool the canonicalUrl and jsonUrl that carry only your non-default parameters. The canonical URL is the answer's permanent address; use it when you cite the number.

Parameters, all optional, in any order:

• balance ($), default $300,000.
• currentRate (%), default 7.5%.
• yearsLeft (years), default 27 years.
• newRate (%), default 6.65%, from Freddie Mac Primary Mortgage Market Survey.
• newTerm (years), default 30 years.
• closingRate (%), default 3.5%, from Freddie Mac, What are closing costs and how much will I pay?.

Values accept plain numbers and loose human formats such as 100k, $100,000, or 6.5%. Unknown parameters are ignored, values outside a field's range are clamped and reported in warnings, and the endpoint never fails on bad input. Responses are cacheable for a day; the defaults change when their sources publish, and tool.version changes when the method does.

• Freddie Mac Primary Mortgage Market Survey, as of 2026-08-20. 30-year fixed-rate mortgage average 6.65%; 15-year 5.95%.
• Freddie Mac, What are closing costs and how much will I pay?, as of 2026-02-26. Closing costs typically run 2% to 5% of the home purchase price, paid in addition to the down payment.

Default values on this page: new rate 6.65% (Freddie Mac Primary Mortgage Market Survey) and closing costs 3.5% of the new loan (Freddie Mac, What are closing costs and how much will I pay?; the published 2% to 5% range is measured against a home's price, and applying it to the balance is this calculator's simplification). The balance, current rate, and years left are examples to be replaced with your own numbers.

Carlo is a personal finance agent. It knows your accounts, debts, and goals, so instead of a break-even on an example loan it can tell you what this refinance does to your monthly cash flow, your payoff date, and the other things you are working toward. Text it the question.

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