Refinance
liveUnderstanding refinance
The Mortgage Refinance Calculator is built around the same formulas your lender uses. Below is the math, in plain language, so you understand exactly what the numbers mean.
The core mortgage formula
Every amortizing mortgage payment follows the same equation: M = P × [r(1+r)n] / [(1+r)n − 1], where P is the principal loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. This formula produces a level payment that pays off the loan exactly over its term — front-loaded with interest, back-loaded with principal.
Why amortization matters
In the first year of a 30-year mortgage at 6.875%, roughly 86% of each payment goes to interest. By year 20, that flips — most of your payment is now retiring principal. Understanding this curve is the key to making smart decisions about extra payments, refinancing, and how long to stay in a home.
What this calculator includes
Refinancing can save you thousands — but only if you stay in the home long enough to recoup the closing costs. We calculate your break-even point so you can decide with confidence. Every input updates the result in real time — no submit button, no page reload, no data sent anywhere.
Refinance questions
When does refinancing make sense?
Refinancing typically makes sense if you can lower your rate by at least 0.5–1%, you plan to stay in the home beyond the break-even point (closing costs divided by monthly savings), or you want to shorten your term.
What are typical refinance closing costs?
Refinance closing costs usually run 2–5% of the loan amount, including origination fees, appraisal, title insurance, and recording fees. You can sometimes roll these into the new loan.
Should I take cash out when refinancing?
Cash-out refinancing can make sense for home improvements, debt consolidation at a lower rate, or major expenses. But you're increasing your loan balance and potentially extending your payoff timeline.