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Refinance Calculator

A lower rate is only half the story. Enter your current loan and the new offer to find your break-even month and true lifetime savings after closing costs.

Your current loan

The new offer

Break-even point
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–
Current payment (P&I)
$0
New payment (P&I)
$0
Remaining cost, current loan
$0
Total cost, new loan
$0
Lifetime savings
$0
Interest saved
$0

Comparison covers principal and interest only. Taxes, insurance, and escrow are assumed unchanged. Closing costs are treated as paid out of pocket.

How to tell if refinancing pays off

Lenders advertise the new monthly payment, but the number that matters is the break-even point: the month your accumulated monthly savings first cover the closing costs. The math is simple — closing costs ÷ monthly savings. Pay $6,000 to save $200 a month and you break even in month 30. Sell, move, or refinance again before then and the refinance cost you money.

The second trap is the term reset. Refinancing a loan with 22 years left into a fresh 30-year loan almost always lowers the payment — but you are signing up for 8 extra years of interest. This calculator compares total remaining cost of both paths, so a tempting payment drop cannot hide an expensive term extension.

Example: You owe $320,000 at 7.25% with 27 years left — payment about $2,253/month. A new 30-year loan at 6.0% drops the payment to roughly $1,919, saving about $335/month. With $6,000 in closing costs, you break even in about 18 months. But the new loan adds 3 years of payments, so check the lifetime savings figure — at these numbers it still saves roughly $33,000 overall.

When refinancing makes sense

The classic rule of thumb is a rate improvement of at least 0.75 to 1 percentage point, but break-even is the real test: if you plan to stay in the home well beyond the break-even month, refinancing usually wins. Other good reasons include dropping PMI (if your home appreciated past 20% equity), switching from an adjustable rate to a fixed rate, or shortening the term to build equity faster.

Refinance FAQs

What is a refinance break-even point?

The month when cumulative monthly savings first exceed closing costs. $6,000 in costs ÷ $200/month savings = a 30-month break-even. Sell before then and the refinance loses money.

How much does it cost to refinance?

Typically 2% to 5% of the loan amount, covering origination fees, appraisal, title insurance, and prepaid items. Get a Loan Estimate for the exact figure.

Is refinancing to a longer term a bad idea?

Not always, but restarting a 30-year clock can raise total interest even at a lower rate. Compare total remaining cost, not just the monthly payment.

When is refinancing worth it?

A rate drop of 0.75–1 point is the usual rule of thumb, but the break-even test decides: stay past it and refinancing generally pays off.