Housing
Mortgage Payment Calculator
Calculate your monthly mortgage payment including principal, interest, property taxes, homeowners insurance, and PMI with verified 2026 statutory rates.
2026 Statutory Rates
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Mortgage Refinance Calculator (2026)
Compare your existing mortgage against a new refinance rate, calculate your exact break-even point in months, and check whether resetting your loan term saves or costs money.
Quick Answer: Refinancing a mortgage replaces an existing home loan with a new loan featuring a lower interest rate, a modified repayment term, or both. Your break-even period represents the exact number of months required for cumulative monthly payment savings to repay upfront closing costs: Break-Even (Months) = Closing Costs ÷ Monthly Payment Savings. For a homeowner refinancing an existing $320,000 mortgage balance from a 6.75% fixed rate over 26 remaining years into a new 5.50% 30-year fixed loan with $6,500 in closing costs, the existing monthly payment of $2,178.54 drops to $1,816.92, saving $361.62 per month. This achieves break-even in exactly 18.0 months ($6,500 ÷ $361.62/mo).
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Last reviewed: October 2026
Calculation Methodology: Mortgage Refinance Calculator (2026)
Mathematical Formula
M = P · [r(1 + r)^n] / [(1 + r)^n - 1] | Break-Even = Closing Costs / (M_old - M_new)
M_old = Existing monthly principal and interest payment
M_new = New monthly principal and interest payment
P = Remaining mortgage loan balance being refinanced
r = Monthly periodic interest rate (Annual interest rate ÷ 12)
n = Loan term in months (Years × 12)
Break-Even Point (Months) = Total Upfront Closing Costs ÷ Monthly Payment Savings (M_old - M_new)
Net Lifetime Savings = (M_old × n_remaining) - [(M_new × n_new) + Closing Costs].
Verified Worked Example (Benchmark)
Benchmark Parameters: Loan Balance (P) = $320,000 · Current Loan = 6.75% Fixed, 26 Years Remaining (312 months) · New Refinance Loan = 5.50% Fixed, 30 Years (360 months) · Closing Costs = $6,500.00.
- Current Monthly Payment (Old): $320,000 × [(0.0675 ÷ 12)(1 + 0.0675 ÷ 12)^312] ÷ [(1 + 0.0675 ÷ 12)^312 - 1] = $2,178.54/month.
- New Monthly Payment (New): $320,000 × [(0.055 ÷ 12)(1 + 0.055 ÷ 12)^360] ÷ [(1 + 0.055 ÷ 12)^360 - 1] = $1,816.92/month.
- Monthly Cash Flow Savings: $2,178.54 - $1,816.92 = $361.62/month.
- Break-Even Horizon: $6,500 closing costs ÷ $361.62/month = 17.97 months (≈ 18.0 months).
- Total Old Payments (312 months): $2,178.54 × 312 = $679,704.48.
- Total New Payments + Closing Costs (360 months): ($1,816.92 × 360) + $6,500 = $654,091.20 + $6,500 = $660,591.20.
- Net Lifetime Savings: $679,704.48 - $660,591.20 = $19,113.28.
Verification: Recomputed by running the deployed engine with $320k balance, 6.75%/26y to 5.50%/30y, $6,500 costs. Yields old $2,178.54, new $1,816.92, saves $361.62/mo, break-even 18.0 months.
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Frequently Asked Questions
Primary source guidance on rules, formulas, and regulations.
The break-even point is calculated by dividing your total out-of-pocket closing costs by your monthly payment savings: Break-Even Months = Closing Costs ÷ Monthly Savings. For example, if refinancing costs $6,500 in closing fees and lowers your monthly mortgage payment by $361.62, your break-even point is 18.0 months ($6,500 ÷ $361.62). If you plan to sell or move before month 23, refinancing results in a net financial loss.
The traditional "2% rule" suggests that refinancing only makes sense if you can lower your mortgage interest rate by at least 2 full percentage points (e.g., from 7.5% down to 5.5%). In modern housing markets with larger loan balances, however, a rate drop of just 0.75% to 1.0% on a $400,000 loan yields substantial dollar savings ($200 to $300+/month) that easily recoups closing costs within two years.
The term-reset trap occurs when a homeowner who has already paid 5 to 10 years on a 30-year mortgage refinances into a brand-new 30-year term. While the monthly payment drops substantially due to stretching remaining principal over another 360 months, paying interest for 35 to 40 cumulative years can significantly increase total lifetime borrowing costs compared to keeping the original loan.
Refinance closing costs typically range between 1.5% and 3% of the total loan balance. Common closing fees include lender origination and processing fees ($500–$1,500), property appraisal ($400–$800), title search and lender title insurance ($800–$2,000), recording fees ($100–$300), and prepaid escrow deposits for property taxes and homeowner insurance.
No. In a "no-closing-cost" refinance, the lender still charges closing expenses; instead of paying cash at closing, the lender either rolls the costs into your principal balance (increasing your debt) or charges a higher interest rate (e.g., 6.375% instead of 6.00%) and uses lender credits to cover closing fees, resulting in higher lifetime payments.
Conventional refinances generally require a minimum credit score of 620 and at least 3% to 5% equity (or 20% equity to eliminate private mortgage insurance). Borrowers with lower credit scores or minimal equity can explore government-backed options such as FHA Streamline Refinance, VA Interest Rate Reduction Refinance Loans (IRRRL), or Fannie Mae RefiNow programs.
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