Should you refinance your mortgage?
Compare your current loan with a new loan at today's MonitorBankRates average rate, or the average in your state. The calculator shows your new monthly payment, the break even point where savings cover the closing costs, and the honest lifetime comparison: total interest left on your current loan versus total interest on the new one, including any closing costs you roll into the balance. It also shows what happens if you refinance but keep paying your current amount, which is how most people capture the full benefit of a lower rate without restarting the clock. If you are still shopping, browse today's mortgage rates to find a competitive offer to plug in.
Use your state's average rate
Loads the MonitorBankRates average 30 year and 15 year rates in your state as the new loan rate.
Refinance Analysis
Compare your current loan with a new loan. Results update as you type.
Cumulative cost: current loan vs. new loan
Cash paid over time including closing costs up front. The new loan starts higher because of closing costs and pulls ahead at the break even point. Cash out is excluded from both lines so the comparison is apples to apples.
Side by side
| Comparison | Current Loan | New Loan | Difference |
|---|
Does Refinancing Pay Off Right Now?
As of September 21, 2026, the MonitorBankRates national average rate on a 30 year fixed mortgage is 6.974% and the 15 year average is 6.548%. A homeowner with a $300,000 balance, 27 years left and a rate of 7.974% pays about $2,258 a month in principal and interest. Refinancing that balance into a new 30 year loan at today's average would cut the payment to about $1,991, saving $267 a month. With $6,000 in closing costs, the break even point is about 23 months. The usual rule of thumb is that a refinance is worth a look when today's rate is at least half a point to three quarters of a point below your current rate and you plan to stay past the break even point.
| Example: $300,000 balance, 27 years left at 7.974%, refinanced to 30 years at 6.974% | Amount |
|---|---|
| Current monthly principal and interest | $2,258 |
| New monthly principal and interest | $1,991 |
| Monthly savings | $267 |
| Break even on $6,000 closing costs | 23 months |
Rates change daily. This example is recalculated every time the page loads with the current MBR average rate.
Understanding the Results
Monthly savings vs. lifetime savings: If you switch to a shorter term (for example 30 years to 15 years), your monthly payment will likely go up because you are paying off the principal much faster. Check the lifetime interest figure to see how much you save overall. The reverse trap also exists: refinancing 20 years of remaining payments into a new 30 year loan lowers the payment but can increase total interest even at a lower rate.
- Monthly savings: The difference between your current principal and interest payment and the new one.
- Break even point: How long you must keep the new loan to recover the closing costs through monthly savings. If the payment goes up there is no cash flow break even, and the decision rests on lifetime interest.
- Interest saved (lifetime): Interest remaining on your current loan minus interest on the new loan and closing costs paid up front. Cash out is excluded so the comparison is fair.
- Keep your current payment: If you refinance but keep paying what you pay today, the extra goes to principal and the new loan pays off years early. This scenario captures the rate savings without extending your payoff date.
How to Use the Refinance Calculator
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Enter your current loan details
Type in your current loan balance, your existing interest rate, and the number of years you have left on your mortgage. Use your most recent statement for the most accurate balance. If your statement shows the principal and interest payment, enter it and the calculator will use it instead of recomputing.
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Enter the proposed new loan
The new rate defaults to today's MonitorBankRates average. Pick your state to use the state average, or enter the rate you were quoted. Choose the term, commonly 15, 20 or 30 years.
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Add your closing costs
Enter the total estimated closing costs for the refinance. Typical closing costs run 2% to 5% of the new loan amount. Check the box to roll them into the loan if you would rather not pay them at closing; the calculator then charges interest on them like the rest of the balance.
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Review your results
The calculator shows your new monthly payment, the break even point in months, the lifetime interest comparison, and what happens if you keep paying your current amount on the new loan. Adjust the inputs to test different scenarios.
When Does Refinancing Make Sense?
The most common rule of thumb is the break even rule: refinancing makes sense if you plan to stay in the home longer than the break even point. If your closing costs are $4,500 and your monthly savings are $150, your break even is 30 months, so if you will stay at least three years you come out ahead. Sell or refinance again before then and the closing costs eat your savings. For a deeper look at the trade offs, see our guide on when to refinance a mortgage.
Beyond the break even, a few other situations tip the math toward refinancing:
Refinancing often makes sense when
- Current rates are at least 0.5% to 0.75% below your existing rate
- You plan to stay in the home well past the break even point
- You are switching from an ARM to a fixed rate before a rate adjustment
- You want to drop PMI by reaching 20% equity through a new appraisal
- You can shorten the term, for example going from a 30 year to a 15 year mortgage, and afford the higher payment
Refinancing rarely makes sense when
- You plan to sell or move within a couple of years
- The rate drop is less than 0.25% and closing costs are typical
- You are early in your current loan and would restart a 30 year amortization, paying mostly interest again
- Your credit score has dropped, meaning you would qualify for a worse rate than you have now
- You are tempted to do a cash out refinance to pay off short term debt, which turns 5 year debt into 30 year debt
One more thing to watch: if you have been paying on a 30 year loan for 7 years and refinance into another 30 year loan, you have added 7 years of payments. Even at a lower rate, the lifetime cost can go up. Always compare the lifetime interest figure, not just the monthly payment, or use the keep your current payment scenario.
Frequently Asked Questions
Why did my monthly payment go up?
If you refinance into a shorter term (for example 27 years remaining down to 15 years), you have fewer months to pay back the principal. Even with a lower interest rate, paying the debt off faster usually requires a higher monthly payment. Rolling closing costs or cash out into the loan also raises the payment.
What are closing costs?
Closing costs are fees charged by lenders and third parties to process your loan. They typically range from 2% to 5% of the loan amount and include the origination fee, appraisal, title insurance, recording fees, and prepaid escrow items.
Does refinancing hurt my credit score?
Temporarily, yes. The lender will perform a hard pull on your credit, which may drop your score by a few points. The drop is usually small and recovers within a few months as you make on time payments on the new loan.
How much does it cost to refinance a mortgage?
Most homeowners pay between 2% and 5% of the loan amount in closing costs. On a $300,000 refinance, that is roughly $6,000 to $15,000. Some lenders offer no closing cost refinances, but those typically come with a higher interest rate, so you are paying the costs over time instead of up front.
What is a break even point and how do I read it?
The break even point is the number of months you must keep the new loan before your monthly savings cover the closing costs. If closing costs are $4,800 and you save $200 a month, your break even is 24 months. After that point, every additional month is savings. If you sell before the break even, the refinance cost you money.
Should I refinance to a 15 year or stay with a 30 year?
A 15 year loan typically carries a lower interest rate and saves a substantial amount in lifetime interest, but the monthly payment is higher. Choose a 15 year if you can comfortably afford the higher payment and want to be debt free faster. Stay with a 30 year if you would rather keep the lower payment for cash flow flexibility; you can always pay extra principal voluntarily, and the calculator's keep your current payment scenario shows what that achieves.
Does refinancing reset my loan?
Yes. A refinance pays off your old loan and starts a new amortization schedule. If you refinance a 30 year loan into another 30 year loan, you have extended your total payoff timeline. Compare the lifetime interest figure carefully; a lower rate does not always mean a lower total cost if you are stretching the term.
How much equity do I need to refinance?
Most conventional lenders require at least 20% equity to refinance without paying private mortgage insurance (PMI). You can often refinance with less equity, but PMI will be added to your payment. FHA streamline and VA IRRRL programs have more lenient equity requirements for qualifying borrowers.
What is the difference between a rate and term refinance and a cash out refinance?
A rate and term refinance changes your interest rate, your loan term, or both, but the loan balance stays roughly the same. A cash out refinance increases your loan balance and gives you the difference in cash, using your home equity. Cash out refinances usually carry slightly higher rates and have stricter equity requirements.
Do refinance rates differ by state?
Yes. MonitorBankRates computes average rates for every state from the rates banks and credit unions in that state publish, and the spread between the cheapest and most expensive states is often a quarter point or more. Pick your state above to load its average as the new loan rate.
