A mortgage refinance calculator that gives you a real answer

Most calculators hand you a monthly-savings number and stop, leaving you to guess whether refinancing is actually worth it. The answer is a single calculation away.

The breakeven point is the whole game

Take your total closing costs and divide by your monthly savings. That is how many months it takes for the refinance to pay for itself:

• Plan to stay in the home past the breakeven month, and refinancing saves you money.
• Plan to leave before it, and you would lose money on the closing costs.

Why the 1% rule misleads

The old "wait for rates to drop 1%" rule ignores the two things that actually decide it: your closing costs and how long you will stay. A smaller rate drop can be worth it with low costs and a long horizon; a big drop can be a loss if you sell next year.

A worked example

Say you bought at 7.4% in 2023 and can refinance to around 6%. That might lower your payment by roughly $285 a month against about $5,000 in closing costs. Breakeven is about $5,000 / $285, or roughly 17 months. If you will be in the home longer than a year and a half, it pays off.

The edge cases matter too

Shortening your term can raise the payment while saving large interest over time. Switching from an adjustable rate to a fixed one buys certainty. A cash-out refinance changes the math again. A good tool weighs these, not just the rate gap.