Mortgage Refinance Calculator
Calculate monthly savings, break-even period, and 5-year net savings on your mortgage refinance.
When to Refinance Your Mortgage in 2026
The traditional rule of thumb is to refinance when you can reduce your rate by at least 1%. In today's market, a 0.75% reduction on a $300,000+ loan typically justifies the closing costs if you stay in the home for 3+ years. Many borrowers who locked in 7.5%+ rates in 2023-2024 are now refinancing as rates have moderated into the 6.5-7% range.
Closing costs typically run 2-3% of the loan balance. On a $320,000 refinance, expect $6,400-$9,600 in total costs. A $150/month savings creates a break-even of 43-64 months. If you plan to stay in the home for 5+ years and your savings are significant, refinancing makes clear financial sense.
Rate-and-Term vs Cash-Out Refinance
A rate-and-term refinance simply adjusts your rate or term without changing your balance significantly. A cash-out refinance replaces your loan with a larger one and gives you the difference — useful for home improvements or debt consolidation, but it resets your amortization clock and increases your total debt. Only use cash-out refi when the use of funds produces returns that justify the cost.