Should I Refinance My Mortgage?

Last updated: August 2026 • Rates reflect Freddie Mac PMMS averages

The quick answer: Dropping your rate by 1% on a $300,000 loan saves roughly $200 per month. With $6,000 in closing costs, you break even in about 30 months — refinance if you plan to stay longer than that. Enter your loans to compare.

Use the Mortgage Refinance Calculator below — modify the values and click Calculate to see your refinance savings.

Current Mortgage
$
Please enter your current loan balance.
%
Please enter your current rate (0.1–30%).
years
Please enter years remaining (1–40).
New (Refinance) Mortgage
%
Please enter the new rate (0.1–30%).
years
Please enter the new term (5–40).
$
$
New Monthly Payment
$0
Monthly Savings
$0

Current Loan

Monthly P&I$0
Remaining Interest$0
Payoff Date—

New Loan

Monthly P&I$0
Total Interest$0
Payoff Date—

Break-Even Analysis

Closing Costs$0
Break-Even Point—
Interest Saved (by payoff)$0
NowBreak-even

How to Use This Refinance Calculator

  1. Current Mortgage — enter your outstanding loan balance, the interest rate on your current loan, and how many years remain on the term.
  2. New Mortgage — enter the rate you have been quoted and the new loan term. Most refinances keep the same balance; a cash-out refinance increases the loan amount, which you enter separately.
  3. Closing Costs — add what the lender quoted (typically 2–5% of the loan). This drives the break-even calculation.
  4. Click "Compare Loans" to see your monthly savings, break-even month, and total interest saved over the life of the loan.

How to Read the Break-Even Point

The break-even point is the single most important number when deciding whether to refinance. It is the number of months it takes for your monthly savings to pay back your closing costs:

Break-even (months) = Closing Costs ÷ Monthly Savings

Example: $6,000 closing costs ÷ $200/mo savings = 30 months

Rule of thumb: if you plan to stay in the home longer than the break-even point, the refinance pays off. If you plan to move sooner, the closing costs will swallow your savings — keep the current loan instead.

Refinance Savings by Rate Drop

Monthly payment savings on a $300,000 loan with 27 years remaining, refinanced into a new 30-year term:

Current RateNew RateMonthly SavingsBreak-Even*
7.5%6.5%$19631 months
7.25%6.5%$15140 months
7.0%6.5%$10458 months
6.8%6.5%$6494 months
8.0%6.5%$29320 months

*Break-even assumes $6,000 in closing costs. Extending the term resets the clock — make extra payments or choose a 15-year term to protect your interest savings.

Refinance vs. Keep Your Current Loan

FactorRefinanceKeep Current Loan
Monthly PaymentLower if rate dropsUnchanged
Upfront Cost2–5% in closing costsNone
Time to SavingsAfter break-evenImmediate
Best WhenRate drops ≥0.5% and staying 3+ yearsMoving soon or rate barely changed

A common middle path is refinancing to a shorter term like 15 years: your payment rises, but the lower 15-year rate and faster payoff can save more total interest than a rate-only refinance. Run both scenarios in our 15-year mortgage calculator and the amortization calculator to see the full picture.

Frequently Asked Questions

Is it worth refinancing a mortgage in 2026?
Refinancing is worth it when the new rate is meaningfully lower than your current rate (typically 0.5 percentage points or more) and you plan to stay in the home long enough to recover closing costs. With 30-year rates around 6.8% in mid-2026, refinancing makes the most sense for borrowers who locked in rates above 7% during the recent high-rate period. Use the break-even calculation on this page to decide.
How long does it take to break even on a refinance?
The break-even point is your total closing costs divided by your monthly savings. For example, if closing costs are $6,000 and you save $200 per month, it takes 30 months to break even. Most experts recommend refinancing only if you plan to stay in the home longer than the break-even period, since that is when the refinance starts saving you money.
What are typical mortgage refinance closing costs?
Closing costs on a refinance typically range from 2% to 5% of the loan amount. For a $300,000 loan that means $6,000 to $15,000, covering lender fees, appraisal, title insurance, credit report, and points. Some lenders offer "no-cost" refinances where fees are rolled into the interest rate — compare both options carefully.
Should I refinance into a 15-year mortgage?
Refinancing into a 15-year mortgage raises your monthly payment but can save hundreds of thousands in interest because the shorter term carries a lower rate and is repaid in half the time. This makes sense if you can comfortably afford the higher payment and your goal is to own the home outright sooner. Compare both options in the refinance calculator.
What is the 1% rule for mortgage refinancing?
The 1% rule says a refinance is worth considering if the new interest rate is at least 1 percentage point below your current rate. In practice, many borrowers benefit from refinancing at 0.5% or even 0.25% when they plan to stay in the home for many years, but the 1% threshold remains a useful quick screen before running the full math.

Data sources: Freddie Mac Primary Mortgage Market Survey (PMMS) July 2026, Consumer Financial Protection Bureau (CFPB) closing cost disclosures. Rates and costs vary by lender, credit score, and loan size. For informational purposes only.

Free Online Calculators

Current Average Mortgage Rates (2026)

Loan TypeAvg. RateTrend
30-yr Fixed6.80%? Stable
20-yr Fixed6.50%? Stable
15-yr Fixed6.10%? Easing
5/1 ARM6.30%? Rising
10-yr Fixed6.05%? Easing

Source: Freddie Mac PMMS, July 2026. For informational purposes only.

Related Mortgage Tools

Refinance Quick Facts

  • Most experts suggest refinancing only if rates drop at least 0.5%.
  • Break-even = closing costs ÷ monthly savings. Stay past it and you win.
  • Closing costs typically run 2–5% of the loan amount.
  • Refinancing into a 15-year term can save more interest than a rate-only refi.
  • Extending the term to 30 years resets your payoff date — budget extra payments.