Compare your current loan with a refinance offer. See the new payment, monthly savings, and how many months it takes to recover the closing costs.
Refinancing replaces your current loan with a new one. This calculator compares what you still owe under the current loan with a new loan for the same balance. It works out both monthly payments with the standard amortization formula, then divides the closing costs by the monthly savings to find the break-even point. If the new payment is not lower, there is no break-even point and refinancing does not save money on these numbers.
Results are estimates for education only and are not financial advice.
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1). Here M is the monthly payment, P is the loan balance, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. Total interest is the monthly payment times the number of payments, minus the balance. Total savings are the remaining payments on the current loan minus the payments on the new loan and the closing costs.
A $300,000 balance at 7.5% with 25 years left has a monthly payment of $2,216.97. Refinancing to 6.0% over 30 years drops the payment to $1,798.65, saving $418.32 per month. With $5,000 in closing costs, the break-even point is 12 months. Total interest falls from $365,092.06 to $347,514.57, a total saving of $12,577.49 after closing costs.
Usually when the new rate is at least 0.75 to 1 percentage point lower, the monthly savings recover the closing costs well before you plan to move or pay off the loan, and your credit and home value qualify you for the quoted rate. A short break-even point matters more than a slightly lower payment.
Stretching the balance over a fresh 30 year term can mean more total interest even with a lower rate, because you pay for more years. Compare total interest and total savings, not just the monthly payment.
You can, but it raises the new balance and the total interest. This calculator treats closing costs as paid up front. If you roll them in, add them to the balance and run the numbers again.
Use this calculator before you sign a refinance offer, not after. It compares what you still owe on your current loan with a new loan for the same balance, and it reports three numbers: the new monthly payment, the monthly savings, and the break-even point. The break-even point is the closing costs divided by the monthly savings, in months. If the new payment is not lower, there is no break-even point and refinancing does not save money on these numbers. A short break-even point matters more than a slightly lower payment, because it tells you how soon the savings actually cover what the refinance costs.
A lower payment can still cost more overall, and this example shows how. Take a $280,000 balance at 7.0 percent with 22 years left. The current payment is $2,081.59 per month and the remaining interest is $269,539.10. Refinancing to 5.75 percent over a fresh 30 years drops the payment to $1,634.00, saving $447.58 per month. With $4,500 in closing costs, the break-even point is about 10.1 months, which looks like an easy win. But total interest on the new loan is $308,241.44, which is $38,702.34 more than the interest remaining on the current loan. The monthly saving comes from stretching the loan 8 extra years, and those extra years of interest outweigh the lower rate.
Compare equal terms to see the real saving. Refinance the same $280,000 balance to 5.75 percent but keep the 22 years remaining instead of restarting 30 years. The payment becomes $1,871.47, saving $210.12 per month, and total interest falls to $214,067.05, which is $55,472.05 less than the current loan's remaining interest. The break-even point is about 21.4 months, longer than the 30 year version, but the total saving is real instead of negative. The lesson is simple: judge a refinance by total interest and total savings, not by the monthly payment alone. If a lender only quotes the new payment, ask for the term and the total interest too.
Three mistakes show up again and again. First, buyers judge by the monthly payment and ignore the term, which is how a refinance that costs more overall gets signed. Second, buyers ignore the break-even point against their own plans. If you move or pay off the loan before break-even, the closing costs exceed the savings and the refinance loses money. Third, buyers roll closing costs into the new balance without re-running the numbers. The page treats closing costs as paid up front; rolling them in raises the balance and the total interest, so add them to the balance and run the comparison again before deciding.
Only refinance if the break-even point falls well before your moving date, with room to spare. Closing costs are paid on day one and recovered month by month. If you sell at month 30 on a refinance with a 21 month break-even, you keep about 9 months of savings. If break-even is 40 months and you sell at month 30, the refinance lost money even though the payment was lower.
Yes. A new loan starts its own amortization schedule from payment one, which means the interest heavy early years begin again. That is why a fresh 30 year term can cost more total interest even at a lower rate. Keeping the same remaining term, or a shorter one, avoids restarting the clock.
Not always. This calculator treats them as paid up front, which is the cleanest comparison. Lenders also offer no closing cost refinances, usually in exchange for a slightly higher rate, and roll-in options that add the costs to the balance. Both alternatives still cost money: a higher rate raises every payment, and a higher balance raises total interest. Run each version through the calculator before choosing.
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