Refinance Calculator
The Refinance Calculator compares your current loan payment and remaining interest against a new loan at a different rate and term. It shows your monthly savings, total interest saved and how many months you need to break even on closing costs.
What this means
Refinancing replaces your current mortgage with a new one, usually at a lower rate or different term. The main benefit is a lower monthly payment and less total interest — but closing costs must be weighed against the savings, which is what the break-even point measures.
How we calculate it
Formula
Monthly savings = old payment − new payment. Break-even months = closing costs ÷ monthly savings.Worked example
A $250,000 loan at 6.5% with 300 months left, refinanced to 5% for 300 months with $6,000 in costs:
- 1Old payment ≈ $1,689, new payment ≈ $1,462
- 2Monthly savings ≈ $227
- 3Break-even ≈ $6,000 / $227 ≈ 26 months
Important assumptions
- Both loans amortize over the entered terms with fixed rates.
- Closing costs are rolled into the analysis as an up-front lump sum.
- You stay in the home at least until the break-even point for refinancing to pay off.
Frequently asked questions
When does refinancing make sense?
Generally when you can lower your rate by at least 0.5–1 percentage point and plan to stay in the home past the break-even point. Also consider a shorter term to pay off faster.
What are typical closing costs?
Usually 2–5% of the loan amount, including appraisal, title insurance, origination fees and other lender charges.
Should I refinance into a shorter term?
A shorter term raises your payment but can dramatically cut total interest. Use the comparison to see the exact trade-off for your numbers.