Refinance Calculator
Compare your current loan with a refinanced loan. See monthly savings, total savings, and break-even point including closing costs. See also Mortgage Calculator and Amortization Calculator.
Current Loan
New Loan
How to Calculate Refinance Savings
To determine if refinancing makes sense, compare the total cost of your current loan with the total cost of the new loan (including closing costs). Calculate the monthly payment for both loans, find the monthly savings, then divide closing costs by monthly savings to find the break-even point. If you plan to stay in the home longer than the break-even period, refinancing is likely worthwhile.
Refinance Break-Even Formula
Monthly Savings = Current Payment − New Payment
Break-Even Months = Closing Costs / Monthly Savings
Total Savings = (Current Total Cost) − (New Total Cost + Closing Costs)
Example
Balance: $250,000
Current: 6.5% with 25 years remaining → $1,691.32/mo
New: 5.5% for 30 years → $1,419.47/mo
Monthly Savings = $1,691.32 − $1,419.47 = $271.85
Closing Costs = $5,000
Break-Even = $5,000 / $271.85 = 19 months
Refinance Scenarios Reference
| Balance | Old → New Rate | Monthly Savings | Break-Even |
|---|---|---|---|
| $200,000 | 7% → 6% | $138 | 36 months |
| $250,000 | 6.5% → 5.5% | $172 | 29 months |
| $300,000 | 7% → 5.5% | $303 | 17 months |
| $350,000 | 6% → 5% | $222 | 27 months |
| $400,000 | 7.5% → 6% | $404 | 15 months |
Frequently Asked Questions
When does refinancing make sense?
Refinancing typically makes sense when you can lower your rate by at least 0.5-1%, plan to stay in the home past the break-even point, and the closing costs are reasonable (typically 2-5% of the loan amount). The break-even point is when cumulative monthly savings exceed closing costs.
What are typical refinance closing costs?
Closing costs typically range from 2% to 5% of the loan amount. For a $250,000 loan, expect $5,000 to $12,500. Costs include appraisal fees, title insurance, origination fees, and recording fees. Some lenders offer "no-closing-cost" refinances with a slightly higher rate.
Should I refinance to a longer term?
Refinancing to a longer term lowers monthly payments but may increase total interest paid over the life of the loan. For example, refinancing a 25-year remaining balance to a new 30-year term reduces payments but adds 5 years of interest. Consider refinancing to the same or shorter term if you can afford the payments.