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Refinance Home Loan Calculator
Enter your current mortgage details and a new rate offer to see your break-even point, monthly savings, and whether refinancing your home loan is worth it.
Sources & Methodology
More Questions About This Calculator
By Sean Baldwin · Last reviewed July 2026
The Verdict
Worth it if: your new rate is at least 1 percentage point lower, you break even on closing costs within 24 months, and you plan to stay in the home past that point.
Not worth it if: your rate is flat or higher, your break-even point is beyond 48 months, or you plan to move before you'd break even.
Break-even threshold: closing costs divided by your monthly savings gives you months to break even; treat 24 months or less as the safe target, refinancing rarely pays off if you move before you hit that mark.
Frequently Asked Questions
When does refinancing make sense?
Refinancing typically makes sense when you can lower your rate by at least 0.5–1%, you plan to stay in your home past the break-even point, and your closing costs are reasonable (usually 2–5% of the loan balance).
What are typical refinancing closing costs?
Closing costs typically run 2–5% of the loan amount. On a $300,000 loan, expect $6,000–$15,000. Some lenders offer 'no-closing-cost' refinances by rolling the costs into the rate.
What is the break-even point?
The break-even point is how many months it takes for your monthly savings to cover the closing costs you paid upfront. If you sell or move before that, refinancing wasn't worth it.
How does my credit score affect refinancing?
Your credit score directly affects the interest rate you'll qualify for. A score above 740 typically unlocks the best rates. Even a 0.25% rate difference can save tens of thousands over the life of a loan.
Should I do a cash-out refinance?
A cash-out refinance lets you borrow against your equity. It can be worth it for home improvements or paying off high-interest debt, but it resets your loan and increases what you owe, so run the numbers carefully.
How the refinance break-even calculation works
The break-even point is simple: divide your total closing costs by your monthly payment savings. If refinancing costs $6,000 in closing costs and saves you $200/month, your break-even is 30 months (2.5 years). If you stay in the home longer than that, refinancing saves you money. If you sell or move before 30 months, it was a net loss. The key insight most people miss: it's not about the interest rate drop, it's about how long you'll be in the home. A 1% rate drop with $10,000 in closing costs on a small loan balance may take 7+ years to break even.
What closing costs actually include when you refinance
Refinance closing costs typically run 2–5% of the loan amount and include: origination fee (0.5–1% of loan), appraisal ($300–$700), title search and insurance ($700–$1,500), credit report fee ($25–$50), recording fees ($100–$250), and prepaid interest for the days until your first new payment. On a $300,000 loan, total closing costs often land between $6,000 and $9,000. Some lenders offer "no-closing-cost" refinances that roll the costs into a slightly higher rate or add them to the loan balance, these make sense when you plan to move within a few years, since you avoid the upfront payment.
The rate drop rule of thumb, and when it breaks down
The old rule says "refinance when you can drop your rate by 1%." This is a rough heuristic at best. On a $500,000 loan, a 0.5% drop saves $208/month, you break even on $6,000 in closing costs in 29 months. On a $100,000 loan, a 1% drop saves only $58/month, you break even on the same $6,000 closing costs in over 8 years. Loan balance, remaining term, and closing costs all matter as much as the rate difference. Always calculate the actual break-even for your specific numbers rather than applying the rule of thumb.
Cash-out refinancing: when it makes sense (and when it doesn't)
A cash-out refinance replaces your existing mortgage with a larger one, giving you the difference in cash. Common uses: home improvements that increase property value, paying off high-interest debt (credit cards at 20%+ replaced by mortgage debt at 6–7%), or funding major expenses. The risk: you're converting unsecured debt to secured debt, if you can't make payments, your home is on the line. Cash-out refis also reset your amortization clock, meaning you pay more interest over the extended term. They make the most financial sense for home improvements with strong ROI (kitchens, baths, additions) or eliminating genuinely high-interest debt, not for lifestyle purchases.
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How We Calculate Your Score
The Worth It Score starts at 50 and adjusts based on how much you save and how quickly you break even. A larger rate reduction and shorter break-even period drive the score up; a rate increase or long break-even period drives it down.
- · Base score: 50
- · Rate reduction: 2%+ adds 30 points; 1–2% adds 20 points; 0.5–1% adds 10 points; any positive reduction adds 5 points; rate increases subtract 30 points
- · Break-even timeline: 24 months or less adds 15 points; up to 48 months adds 5 points; over 48 months subtracts 10 points
The score assumes you stay in the home past your break-even point. If you plan to move before break-even, the value of refinancing is negative regardless of the score.
Cite this calculator: Worth It Calculators, "Is Refinancing Your Mortgage Worth It Right Now? (2026 Calculator)," worthitcalculators.com/refinance-break-even/ (updated July 2026).