Mortgage Refinance Calculator

Mortgage Refinance Calculator: Should You Refinance Your Home Loan in 2026?

Refinancing replaces your existing mortgage with a new loan, ideally at a lower interest rate or on better terms. Whether refinancing makes financial sense depends on three factors: how much your monthly payment drops, what the closing costs are, and how long you plan to stay in the home. This calculator shows all three so you can make a confident, numbers-based decision.

What Is a Mortgage Refinance?

When you refinance a mortgage, you pay off your existing loan and replace it with a new one. The new loan has a new interest rate, a new term, and — crucially — new closing costs. Refinancing can lower your monthly payment, reduce your total interest cost, switch from an adjustable rate to a fixed rate, or let you tap home equity through a cash-out refinance. The right reason to refinance depends on your specific goals.

The Break-Even Point: The Most Important Refinance Number

The break-even point is the number of months it takes for your monthly savings to cover the upfront closing costs of refinancing. For example, if refinancing costs $5,000 in closing costs and saves you $200/month, your break-even is 25 months. If you plan to stay in the home longer than 25 months, refinancing puts money in your pocket. If you might sell or move in less than 25 months, you'll lose money on the refinance even if the new rate is lower.

The calculator above computes your exact break-even point automatically once you enter your closing costs and projected payment savings.

Rate-and-Term Refinance vs Cash-Out Refinance

• Rate-and-term refinance: You change the interest rate, the loan term, or both, without changing the loan balance beyond your current remaining balance. The goal is to reduce your payment or total interest cost.
• Cash-out refinance: You borrow more than your remaining balance and receive the difference in cash. This lets you tap home equity for renovations, debt payoff, or other needs, but it increases your loan balance and typically comes with a higher rate than a rate-and-term refinance.

When Refinancing Makes Sense

• Your new rate is at least 0.75-1% lower than your current rate
• You plan to stay in the home long enough to pass the break-even point
• You want to switch from an adjustable rate to a fixed rate for stability
• You want to shorten your loan term (e.g., from 30 to 15 years) and can afford the higher payment
• You need to remove a co-borrower from the loan
• You want to eliminate PMI after gaining 20%+ equity

When Refinancing May Not Make Sense

• You're close to paying off the loan — refinancing restarts the amortization cycle
• The rate drop is too small to overcome closing costs before you'd sell
• Your credit score has dropped since your original loan, and you'd get a worse rate
• You're extending the term significantly, which can cost more in total interest even with a lower rate

Typical Refinance Closing Costs in 2026

Refinancing isn't free. Typical closing costs run 2-5% of the loan amount and include:

• Loan origination fees
• Appraisal fees ($300-$600 typically)
• Title search and title insurance
• Recording fees and government taxes
• Prepaid interest and escrow setup

Some lenders offer "no-closing-cost refinance" — but the costs are typically rolled into a slightly higher rate instead. Enter these costs in the calculator above to see how they affect your break-even timeline.

The 1% Rule: A Common Refinance Guideline

A commonly used guideline is to refinance only when you can lower your rate by at least 1 percentage point. This is a useful starting rule, but it oversimplifies — a 0.5% rate drop on a large loan balance might save more total interest than a 1.5% drop on a nearly paid-off loan. Always use the actual numbers from your situation rather than any single rule of thumb. The calculator above does this for you precisely.

Frequently Asked Questions

How much does refinancing a mortgage cost?

Refinancing typically costs 2-5% of your loan balance in closing costs. On a $250,000 loan, that's $5,000 to $12,500. These upfront costs are why the break-even timeline matters — you need to stay in the home long enough for monthly savings to exceed those costs.

How many times can I refinance my mortgage?

There's no legal limit on how many times you can refinance, but each refinance resets your loan and incurs new closing costs. Most lenders require a "seasoning period" of 6-12 months between refinances.

Does refinancing hurt my credit score?

Refinancing causes a hard credit inquiry, which typically lowers your score by a few points temporarily. It also opens a new loan account and closes the old one. The impact is usually minor and recovers within a few months of on-time payments on the new loan.

Should I refinance to a 15-year or 30-year mortgage?

Refinancing to a 15-year term lowers your rate and saves dramatically on total interest, but requires a significantly higher monthly payment. Refinancing to a new 30-year extends your payoff date but gives you the lowest possible monthly payment. See our 15 vs 30-year mortgage comparison for a detailed breakdown.

Related reading: 15-year vs 30-year mortgage guide · Home buying guide · How amortization works