Should I Refinance My Mortgage? 2026 Calculator
Refinancing makes sense when cumulative monthly savings recoup closing costs before you move or refinance again. A lower rate alone does not guarantee a good deal — the break-even timeline, remaining loan term, and cost of resetting amortization all factor in. Enter your current and proposed terms above to see whether the math favours action or patience.
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A positive lifetime figure means the new loan costs more in total interest even though the monthly payment fell — usually because the term restarted. Both numbers matter.
Beyond the Rate Gap
A common shortcut says refinancing is worthwhile whenever you can drop the rate by at least half a percentage point. That rule of thumb ignores too many variables to be reliable. Closing costs, the remaining term on your current loan, and how long you intend to keep the property all shift the answer.
Consider a borrower 8 years into a 30-year loan. Refinancing into a new 30-year term at a lower rate reduces the monthly payment, but it also resets the amortization clock. The early years of any mortgage are interest-heavy, so restarting means a larger share of each payment goes to interest again. Unless the rate reduction is large enough to overcome that reset, the borrower pays more in total interest despite the lower monthly bill.
A smarter approach is to refinance into a term that matches the remaining years on your current loan — or shorter. That preserves the progress already made on principal and lets the rate drop deliver genuine savings.
Three Situations Where Refinancing Backfires
Short holding period. If you plan to sell within two to three years, most break-even timelines will not close in time. The closing costs become a sunk expense with no upside. Use the break-even calculator to confirm whether your timeline clears the threshold comfortably.
Small rate difference with high costs. A rate drop of a quarter point on a $250,000 loan saves roughly $40 per month. If closing costs total $4,000, break-even is about 100 months — over eight years. For most borrowers, that is too long to justify the effort and risk of rate changes in between.
Term extension without purpose. Rolling a 22-year remaining balance into a fresh 30-year term is tempting for the lower payment, but you add eight years of interest payments. Unless cash-flow relief is the explicit goal and you have modelled the total-cost difference, extending the term is the most common way a refinance ends up costing more than it saves.
The calculator compares scenarios based on the rates and terms you provide. It does not predict future rate movements or guarantee lender pricing.