Should You Refinance, Recast, or Keep Your Mortgage?
Compare your current mortgage side by side with a rate-and-term refinance, a cash-out refinance, a HELOC, a home equity loan, a recast, and extra principal payments — scored over the years you actually expect to stay, not over a full term you probably will not see out.
Private by design. Your numbers stay on this device.
Educational estimates only. Not financial, tax, or lending advice.
Should you refinance?
Refinancing makes financial sense when the total cost of the new loan — closing costs, payments made, and the balance still owed — falls below the cost of keeping your current mortgage before you sell or refinance again. That break-even test matters more than the size of the rate drop. A 0.5% improvement can pay for itself in under two years on a large balance with low closing costs, while a 1.5% improvement can lose money on a small balance with high costs if you move in three years.
The two things that most often reverse the answer are the term reset (refinancing into a fresh 30 years after paying for eight) and financed closing costs (paying interest on the fees for the life of the loan). Both are modelled below.
Built for US mortgages. Every rate, cost and tax figure below is an editable example you enter — never a live quote.
Refinance decision
- Today
- $2,767/mo
- Rate & term refi
- $2,623/mo
- Break-even
- Month 29
- Staying
- 7 years
Your decision dashboard
Each card shows which scenario leads on one measure over your 7 years planned stay — and what you give up to get it. There is no single best option, because these measures pull against each other.
Lowest monthly payment
Rate-and-term refinance
$2,623/mo all-in
Trade-off: A lower payment usually means a longer term or a bigger balance, which can raise what you pay in total.
Lowest cost over your planned stay
Rate-and-term refinance
$449,929
Trade-off: This counts payments made plus the balance still owed at the end of your stay, minus any cash you received. It can still carry a higher monthly payment.
Fastest payoff
Rate-and-term refinance
25 years
Trade-off: Paying off soonest normally requires the highest monthly outlay and ties up cash you cannot easily get back.
Lowest closing cash needed
Keep current mortgage
$0
Trade-off: Paying little or nothing upfront often means costs are financed into the balance, where they accrue interest.
Scenario by scenario
Keep current mortgage
Change nothing. No closing costs, no new loan, and your existing rate and payoff date stay exactly as they are.
- All-in monthly
- $2,767
- Cost over your stay
- $465,286
- vs keeping your loan
- Baseline
- Break-even
- —
Rate-and-term refinance
Replace your mortgage with a new 25-year loan at 5.75%.
- All-in monthly
- $2,623
- Cost over your stay
- $449,929
- vs keeping your loan
- +$15,357
- Break-even
- Month 29
Full comparison
Every measure, side by side, over the 7 years you expect to stay. Scroll the table sideways on a narrow screen.
| Measure | Keep current | Rate & term refi |
|---|---|---|
| Interest rateThe rate on the new or largest loan in this scenario. | 6.875% | 5.75% |
| Starting loan balance | $320,000Low | $327,500 |
| Starting LTV (loan-to-value) | 71.1% | 72.8% |
| Principal & interest | $2,204 | $2,060Low |
| Extra principalVoluntary principal on top of the scheduled payment. Part of what you pay each month, so it belongs in the all-in figure. | — | — |
| PMI | — | — |
| Property tax + insuranceIdentical across every scenario for the same home, but a real part of the monthly bill. | $563 | $563 |
| Monthly HOA dues | — | — |
| All-in monthly payment | $2,767 | $2,623Low |
| Total closing costs | NoneLow | $7,500 |
| Cash needed at closingClosing costs paid in cash, plus any lump sum you contribute. | $0Low | $0Low |
| Cash received | None | None |
| Interest over 7 years | $145,286 | $122,429Low |
| Balance left after 7 yearsWhat you would still owe when you expect to sell or refinance again. | $280,138 | $276,862Low |
| Equity after 7 yearsHome value less the balance owed. Uses your assumed appreciation rate, which is 0% unless you change it — it is never used to remove mortgage insurance early. | $169,862 | $173,138Low |
| Invested balance after 7 yearsOnly the growth on this account is credited against net cost. The contributions are money you paid in, so counting the whole balance would count them twice. | — | — |
| Net cost over your planned stayCash closing costs + payments made + balance still owed − cash received. Excludes property tax, insurance and HOA, which are identical across scenarios. | $465,286 | $449,929Low |
| Savings vs keeping your mortgageThis is not the same as interest saved: it also counts the balance you still owe at the end of your stay and any cash you paid upfront. The row above reconciles the two. | Baseline | +$15,357Low |
| Why that differs from interest saved | — | $22,857 less interest, less $7,500 of extra balance you start out owing — leaving you $15,357 better off. |
| Break-even point“Ahead from month 1” means there was no upfront cost to recover. “Never recovers” means the costs are never paid back. | — | Month 29 |
| Simple paybackUpfront cash divided by the monthly payment saving. This is the number most people mean by break-even, and it flatters a refinance: it ignores the principal you stop paying down when the term restarts. The equity-adjusted figure above is the one to rank on. | — | No upfront cash to recover |
| Time to payoff | 26 years | 25 yearsLow |
| Total interest, full term | $367,691 | $290,598Low |
| Lifetime cost (interest + costs) | $367,691 | $298,098Low |
How to read this: “Low” marks the lowest figure among the scenarios shown — it is not a recommendation. Net cost counts payments made plus the balance still owed at the end of your stay, minus cash received, which is what makes loans of different sizes and terms comparable.
Charts
Mortgage balance over time
What you still owe each month under every selected scenario, including any second lien. The dashed line marks the end of your planned stay.
Cumulative interest paid
Total interest paid to date. A line that flattens has reached payoff. Where lines cross is where one scenario overtakes another on interest.
Break-even: cumulative savings against keeping your mortgage
Above the zero line a scenario has saved you money overall; below it, it has cost you. Each marker is that scenario's break-even month — where its line crosses zero.
Rate & term refi: breaks even in month 29 (2 years 5 months).
What your first monthly payment is made of
Principal and interest is only part of the bill. Property taxes, insurance, mortgage insurance and HOA dues are stacked here at their month-one amounts.
What each scenario actually means
Keep current mortgage
- This is the baseline every other scenario is measured against.
Rate-and-term refinance
- A rate-and-term refinance replaces your entire existing mortgage balance with a new loan. No cash is taken out.
- Closing costs are financed, so you pay interest on them for the life of the loan and your balance starts higher than it is today.
Want the terminology behind these figures? The mortgage glossary defines every term used here, including break-even point, LTV and mortgage recast.
Full amortization schedule
Every payment, month by month: how much goes to interest, how much retires principal, and what you still owe afterwards. Switch to the annual view for a year-by-year summary, or download the full schedule as a CSV that opens in Excel, Google Sheets and Numbers.
| Month | Payment date | Beginning balance | Payment | Principal | Interest | Extra principal | Ending balance | Cumulative interest | Mortgage insurance | LTV |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Jan 01, 2026 | $320,000.00 | $2,204.15 | $370.82 | $1,833.33 | — | $319,629.18 | $1,833.33 | — | 79.9% |
| 2 | Feb 01, 2026 | $319,629.18 | $2,204.15 | $372.94 | $1,831.21 | — | $319,256.24 | $3,664.54 | — | 79.8% |
| 3 | Mar 01, 2026 | $319,256.24 | $2,204.15 | $375.08 | $1,829.07 | — | $318,881.16 | $5,493.61 | — | 79.7% |
| 4 | Apr 01, 2026 | $318,881.16 | $2,204.15 | $377.23 | $1,826.92 | — | $318,503.93 | $7,320.53 | — | 79.6% |
| 5 | May 01, 2026 | $318,503.93 | $2,204.15 | $379.39 | $1,824.76 | — | $318,124.54 | $9,145.29 | — | 79.5% |
| 6 | Jun 01, 2026 | $318,124.54 | $2,204.15 | $381.56 | $1,822.59 | — | $317,742.98 | $10,967.88 | — | 79.4% |
| 7 | Jul 01, 2026 | $317,742.98 | $2,204.15 | $383.75 | $1,820.40 | — | $317,359.23 | $12,788.28 | — | 79.3% |
| 8 | Aug 01, 2026 | $317,359.23 | $2,204.15 | $385.95 | $1,818.20 | — | $316,973.28 | $14,606.48 | — | 79.2% |
| 9 | Sep 01, 2026 | $316,973.28 | $2,204.15 | $388.16 | $1,815.99 | — | $316,585.12 | $16,422.47 | — | 79.2% |
| 10 | Oct 01, 2026 | $316,585.12 | $2,204.15 | $390.38 | $1,813.77 | — | $316,194.74 | $18,236.24 | — | 79.0% |
| 11 | Nov 01, 2026 | $316,194.74 | $2,204.15 | $392.62 | $1,811.53 | — | $315,802.12 | $20,047.77 | — | 79.0% |
| 12 | Dec 01, 2026 | $315,802.12 | $2,204.15 | $394.87 | $1,809.28 | — | $315,407.25 | $21,857.05 | — | 78.8% |
Showing 1–12 of 312 payments
Download any scenario
Each file is generated in your browser — nothing is uploaded. Scenarios with a second lien include a separate block for each loan.
Educational estimates only. Not financial, tax, or lending advice. Every rate here is an example you enter, never a live quote or an offer. Verify loan terms, closing costs, property taxes, insurance and mortgage insurance with qualified providers before deciding.
How to use this refinance calculator
Four inputs decide almost the entire answer. The rest refine it.
- Your current balance and rate. Take the payoff balance from your latest statement, not the original loan amount. If you know your exact principal and interest payment, enter it — it is more accurate than a derived figure.
- How long you have left. Years and months remaining, not the original term. This is what a new 30-year loan would be resetting.
- The offered rate, term and closing costs. Take these from a Loan Estimate rather than an advertised rate. Advertised rates assume a borrower profile that may not be yours.
- How long you expect to stay. The single most decisive input, and the one most calculators ignore. Every scenario is scored over this horizon.
Results update as you type. Nothing is submitted anywhere — the calculation runs in your browser.
Rate-and-term vs cash-out refinance
Two different products with different pricing, different limits, and different reasons to exist.
| Rate-and-term | Cash-out | |
|---|---|---|
| New loan amount | Payoff balance (+ financed costs) | Balance + cash taken (+ costs) |
| Cash to you at closing | None | The amount you request |
| Effect on LTV | Unchanged or lower | Higher |
| Typical LTV cap | Up to ~95% on conventional | Commonly ~80% |
| Relative pricing | Better | Usually priced above rate-and-term |
| Main reason to use it | Lower the rate or change the term | Access equity as cash |
General characteristics only. Caps, pricing and eligibility differ by lender, loan product, occupancy and location.
If you only want better pricing, a rate-and-term refinance is the cleaner instrument. If you need cash, compare a cash-out refinance against second liens before assuming it is the answer — see cash-out refinance vs HELOC.
The 30-year reset trap
The most common way a refinance quietly costs money while appearing to save it.
Interest is charged on the outstanding balance, so early payments are interest-heavy — on a 30-year loan at 6.5%, roughly three-quarters of the first payment is interest. Eight years in, that ratio has shifted meaningfully in your favour. Refinancing into a fresh 30-year term throws that progress away and puts you back at the start of the curve.
The monthly payment falls, which feels like winning. But you have added years of payments, and total interest can rise even at a lower rate. The fix is straightforward: match the new term to what you have left. If you have 22 years remaining, compare a 20-year and a 25-year refinance rather than defaulting to 30. The comparison table above shows total interest for whichever term you pick.
Refinance calculator questions
- How much does my interest rate need to drop before refinancing is worth it?
- There is no universal threshold. The old '1% rule' ignores the two things that actually decide it: your closing costs and how long you will keep the loan. A 0.5% drop can pay for itself in under two years on a large balance with low costs, while a 1.5% drop can lose money on a small balance with high costs if you sell in three years. Run your own numbers and look at the break-even month, not the rate difference.
- What is a refinance break-even point?
- It is the month when the money you have saved finally exceeds what the refinance cost you. This calculator measures it by comparing total cost — payments made plus the balance still owed, minus any cash received, against simply keeping your current mortgage. If your break-even month falls after you expect to sell or refinance again, the refinance costs you money even though the monthly payment fell.
- Should I refinance or take a HELOC if I need cash?
- It depends heavily on your existing rate. A cash-out refinance replaces your entire mortgage, so a low existing rate is re-priced at today's rate on the whole balance. A HELOC or home equity loan is a second lien that leaves the first mortgage alone, so you only pay the higher rate on the amount you borrow. When your current rate is well below market, a second lien is frequently cheaper despite its higher headline rate. When your current rate is at or above market, a cash-out refinance can win.
- What is the difference between a mortgage recast and extra payments?
- Both apply money to principal, but they do different things. Extra payments shorten the loan while your required monthly payment stays the same. A recast re-amortizes the reduced balance over the remaining term, which lowers the required payment but keeps the original payoff date. A recast is the only way to reduce a required payment without giving up a below-market rate. Not all servicers or loan types offer it.
- Is it worth refinancing to a shorter term?
- Shorter terms usually carry lower rates and dramatically less total interest, but the monthly payment goes up, often by more than people expect. If the higher payment is comfortable, a 15-year refinance is one of the most cost-effective moves available. If it is not, extra principal payments on your existing loan get you most of the interest savings while keeping the lower required payment as a safety net.
- Should I roll closing costs into the loan or pay them in cash?
- Paying in cash keeps the balance lower and avoids paying interest on the fees, but it consumes savings immediately. Rolling them in preserves cash at the cost of interest over the life of the loan. On a $8,000 cost financed for 30 years at 6%, you pay roughly $9,000 in additional interest on the fees alone. The calculator models both, so you can see the difference rather than guess at it.
- Does refinancing reset my mortgage back to 30 years?
- It does if you choose a 30-year term, and that is the most common mistake in refinancing. Resetting to 30 years after paying for eight puts you back at the interest-heavy start of the amortization curve. Choosing a term close to what you have left — 20 or 25 years, or 15 if the payment fits) captures the rate improvement without restarting the clock.
- Why is my monthly payment higher than the principal and interest figure I was quoted?
- Because principal and interest is only part of the bill. Property taxes, homeowners insurance, mortgage insurance and HOA dues are all real monthly costs, and together they routinely add 25% to 50% on top of P&I. Taxes and insurance also vary enormously by location, so two identical loans on identical homes can differ by hundreds of dollars a month. Every result in this tool shows the all-in figure.
Related calculators
- AffordabilityWork out a home price from income, debts, cash on hand and your own housing-to-income and debt-to-income ceilings.
- Home equityCompare four ways to turn home equity into cash, side by side.
- Refinance break-evenFind the month a refinance stops costing you money and starts saving it.
- Mortgage recastSee what a lump sum plus a re-amortization does to your required payment.
- Extra paymentsModel monthly, annual and one-time extra principal against your payoff date.
- Amortization scheduleBuild a full month-by-month table and download it as CSV.