How Much Is a Refinance? Estimate the Costs

A refinance calculator estimates the monthly payment and total interest on a replacement loan from its amount, APR, and term; it does not estimate the fees charged to refinance. Enter the new loan’s principal, the APR supplied by the lender, and the term in years to see the payment and interest under a fixed-rate assumption.

Formula

This calculator works out the level monthly payment on a fixed-rate, amortizing loan, then subtracts the amount borrowed from the sum of the scheduled payments to estimate total interest.

• P is the replacement loan’s principal, in dollars.
• APR is the annual percentage rate entered as a percentage.
• r is the monthly rate, calculated as APR / 1,200.
• n is the term in months, calculated as years × 12.
• Payment = round(P × r / (1 − (1 + r)⁻ⁿ), 2), in dollars per month.
• Total interest = payment × n − P, in dollars.

The interest output uses the payment rounded to cents, as a payment schedule generally does. The displayed interest is therefore an estimate based on the full number of scheduled payments; a lender’s payment dates and rounding can produce a small difference.

Worked Example

Using the default inputs—$20,000 principal, 8% APR, and a five-year term—the monthly rate is 0.08 / 12 = 0.0066667 and the term is 5 × 12 = 60 months.

1. Payment before rounding = 20,000 × 0.0066667 / (1 − (1.0066667)⁻⁶⁰).
2. The calculated payment rounded to cents is $405.53 per month.
3. Total scheduled payments using that rounded payment = $405.53 × 60 = $24,331.80.
4. Estimated total interest = $24,331.80 − $20,000 = $4,331.80.

Assumptions

• The APR and payment remain fixed throughout the term.
• Payments are monthly and made at the end of each payment period.
• Interest accrues monthly at APR / 12.
• The calculation excludes refinance fees, taxes, insurance, mortgage insurance, escrow, and any separate charges or credits. No fees are added to the principal automatically.

What a Refinance Costs

“How much is a refinance?” can mean either the cost of arranging the new loan or the amount borrowed to replace the old one. This calculator answers a related but narrower question: the payment and interest for a stated replacement-loan amount. It cannot produce an all-in refinance cost without actual fee information from the lender and details of the existing loan.

Refinance charges vary by loan type, property or collateral, transaction, and provider. Possible items may include an application or origination charge, valuation or inspection, title and settlement services, recording charges, or prepaid items. Not every refinance has every charge, and names and treatment differ. Ask for an itemized estimate rather than relying on a generic percentage or assuming that advertised “no-cost” wording means no expense; charges may be handled in different ways.

Some costs are paid at closing; others may be added to the new balance or offset by a lender credit. A fee rolled into the principal can increase both the monthly payment and interest over the loan’s life. A credit can reduce cash due at closing but may come with other terms. Compare the written figures and identify which amounts are fees, prepaid expenses, credits, or changes to the balance.

How to Estimate Your Actual Refinance Amount

Start with the payoff amount for the existing loan, not just the balance shown on an earlier statement. The payoff figure is calculated for a particular date and may include accrued interest or other amounts. Then account for the new loan’s charges and credits using the lender’s itemization. Your replacement principal may differ from the payoff if you pay some costs upfront, finance them, or take cash out.

1. Request the current payoff amount and its valid-through date from the existing servicer.
2. Get the proposed new loan amount, APR, term, payment schedule, and itemized charges from the new lender.
3. Determine whether each cost is paid upfront, financed into principal, or offset by a credit.
4. Enter the resulting principal and the quoted APR and term in the calculator.
5. Compare the new payment and interest with the existing loan’s remaining payments, using the same time horizon and including relevant fees.

A lower monthly payment alone does not establish that a refinance costs less overall. It can result from extending repayment over more months, even if total interest rises. Conversely, a shorter term can increase the payment while reducing the number of payment periods. The calculator shows the new loan’s scheduled payment and interest, not the change in total household costs or the financial effect of using cash at closing.

Common Comparisons and Limits

For a meaningful comparison, use the balance actually being refinanced, the remaining term of the current loan, and the proposed term for the new one. Compare total payments over a shared period if you may sell, repay, or refinance again before the new term ends. Include any costs paid out of pocket as well as fees incorporated into the principal. If the loan has variable rates, irregular payments, a balloon payment, or unusual fees, this fixed-payment calculator does not model those features.

APR is not necessarily the same as the note rate or the interest rate used to calculate each payment. APR may incorporate certain financing costs under the lender’s calculation, while the payment formula here treats the entered APR as the rate applied to the balance. Use the exact rate and payment figures specified for the lender’s quote, and check how its disclosure defines them. Do not add a fee twice if it is already represented in the quoted amount or rate.

The estimate also does not determine taxes, eligibility, approval, or whether a particular loan meets a program’s requirements. Those details depend on the transaction and the lender’s documentation. The calculator is arithmetic for comparing stated inputs, not a substitute for a written loan estimate or final disclosure.

Frequently Asked Questions

How much does it cost to refinance a loan?
There is no single amount that applies to every refinance. Costs depend on the loan and transaction; request an itemized estimate and check which charges are paid upfront, financed, or credited.

Does this calculator include refinance closing costs?
No. It calculates a payment and total interest from the principal, APR, and term. To reflect financed fees, include them in the loan amount only when the lender confirms they are part of the new principal.

Does refinancing lower your monthly payment?
Not necessarily. The payment depends on principal, APR, and term. A longer term can lower a monthly payment while increasing the time payments are made and potentially the total interest.

What loan amount should I enter?
Use the proposed new principal from the lender’s figures. It may include an existing loan’s payoff and financed costs, but it is not automatically the same as the old statement balance.

Why does the lender’s payment differ from this estimate?
The quote may use a different rate definition, payment date, rounding method, term, financed fees, or loan structure. Check the lender’s itemized figures and assumptions against the calculator inputs.

This result is an estimate; the lender’s disclosure gives the exact figures.

Related

• Cost to Refinance a Loan: Estimate the Break-Even Point
• Cost to Refinance a Loan: Calculate the Break-Even Point
• Cost to Refinance a Loan: Calculator and Benefits

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | round(p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)), 2) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2