David is a Chartered Financial Analyst and licensed mortgage advisor with 15 years of experience helping homeowners analyze break-even points and savings from mortgage refinancing.
This 4-in-1 Mortgage Refinance calculator helps you model your new loan terms. Enter any three variables—Loan Amount, New Rate, New Term, or New Monthly Payment—and we will solve for the fourth.
Mortgage Refinance Calculator
Refinance Payment Formulas
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Solve for Loan Amount (P):
P = M [ (1 + i)^n – 1 ] / [ i(1 + i)^n ]
Solve for Loan Term (T):
T = ln(M / (M – Pi)) / (n * ln(1 + i))
Solve for Rate (R):
Solved iteratively (no direct formula)
Formula Variables
- (P) Loan Amount: The principal balance of your new, refinanced mortgage.
- (R) Annual Rate: The new, fixed annual interest rate (APR) for your refinanced loan.
- (T) Loan Term: The total number of years in your new loan agreement (e.g., 15 or 30).
- (M) Monthly Payment: The new fixed monthly payment covering only Principal & Interest (P&I).
- (i) Monthly Rate: The new annual rate divided by 12.
- (n) Total Payments: The total number of payments (New Term in years * 12).
Related Calculators
What is a Mortgage Refinance Calculator?
A Mortgage Refinance Calculator is a tool designed to help you analyze the terms of a *new* mortgage that you would get to replace your *current* one. Refinancing is the process of paying off your existing loan with a new loan. Homeowners typically do this to secure a lower interest rate, reduce their monthly payment, or change their loan term (e.g., from a 30-year to a 15-year term).
This 4-in-1 calculator allows you to model your new loan’s core components. You can find your new monthly payment (M) based on a loan amount (P), rate (R), and term (T). More powerfully, you can also work backward. For example, if you know the maximum monthly payment you can afford (M), you can solve for the Loan Amount (P) you can borrow or the Interest Rate (R) you would need to find.
This tool is the first step in determining if a refinance is right for you. It helps you understand what’s possible, so you can compare a potential new loan to your current one and calculate your potential savings.
How to Calculate a New Refinance Payment (Example)
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Identify Your New Loan Details
You plan to refinance your remaining mortgage balance of $250,000 (P). You are offered a new 30-year (T) loan at a 5.5% (R) annual rate. You want to find your new Monthly Payment (M).
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Convert Annual Rate to Monthly (i)
First, convert the new annual rate to a monthly decimal: i = (5.5% / 100) / 12 = 0.055 / 12 = 0.0045833
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Calculate Total Number of Payments (n)
Next, find the total number of monthly payments for the new loan: n = 30 Years * 12 Months/Year = 360 payments
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Apply the Amortization Formula
Use the standard loan payment formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
M = 250,000 [ 0.0045833 * (1 + 0.0045833)^360 ] / [ (1 + 0.0045833)^360 – 1 ]
M = 250,000 [ 0.0045833 * 5.1977 ] / [ 5.1977 – 1 ]
M = 250,000 [ 0.02382 ] / [ 4.1977 ]
M = 250,000 * 0.005674
M = $1,418.50 -
Final Result
Your new monthly principal and interest (P&I) payment will be $1,418.50.
Frequently Asked Questions (FAQ)
The general rule of thumb is to consider refinancing if you can secure a new interest rate that is at least 0.75% to 1% lower than your current rate. However, you must also consider closing costs, which can be 2-5% of the new loan amount.
What is a “break-even point”?The break-even point is the time it takes for your monthly savings to cover the closing costs. For example, if closing costs are $4,000 and your new loan saves you $200/month, your break-even point is 20 months ($4,000 / $200). You should plan to stay in the home longer than your break-even point.
Can I use this to shorten my loan term?Yes. Enter your Loan Amount (P) and your new interest Rate (R). Then, enter a shorter Term (T), like 15 years. Leave the Monthly Payment (M) blank and hit “Calculate.” This will show you the higher payment needed to pay off your mortgage in 15 years.
What is a “cash-out” refinance?A cash-out refinance is when you borrow *more* than you owe on your current mortgage and receive the difference in cash. For example, if your home is worth $400,000 and you owe $250,000, you could get a new loan for $300,000, pay off the $250,000, and receive $50,000 in cash. Use this calculator by entering the new, higher loan amount ($300,000) as (P).