Refinance Calculator
See how much refinancing saves each month, how long it takes to earn back the closing costs, and the effect over the life of the loan.
How it's calculated
Refinancing swaps your current mortgage for a new one, usually to grab a lower rate. The catch is the closing costs, which you pay up front. The break-even is how many months of lower payments it takes to earn those costs back. Stay past the break-even and the refinance pays off.
Take the default. A $300,000 balance at 7 percent with 25 years left has a payment of about $2,120 a month. Refinancing to 5.5 percent over a fresh 30 years drops it to about $1,703, a saving of $417 a month. With $6,000 in closing costs, you break even in 15 months. After that the savings are yours.
Watch the term. Stretching back out to a new 30 years lowers the payment but can add interest, since you pay for longer. Here the rate drop is big enough that you still save about $16,889 over the life of the loan even with the longer term. A smaller rate cut with a longer term can quietly cost more overall, so check the lifetime figure, not just the monthly saving.
Assumptions
- Both loans are amortized on the current balance. The current payment is the one that pays that balance off over the years left at your current rate.
- Closing costs are paid up front and added to the lifetime interest comparison. Property tax, insurance, and cash-out amounts are not modeled.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
How does refinance break-even work?
Divide your closing costs by your monthly savings. That is the number of months of lower payments it takes to recover the cost of refinancing. If you plan to keep the home past that point, refinancing usually makes sense.
Is it worth refinancing for a lower payment?
Often, but check two things. The break-even months, so you know you will stay long enough to benefit, and the lifetime interest, since a longer new term can add interest even while the monthly payment falls.
What are typical refinance closing costs?
Usually 2 to 5 percent of the loan balance, covering the appraisal, title, origination, and other fees. Some lenders offer a no-closing-cost refinance in exchange for a slightly higher rate, which changes the math.
Should I refinance to a shorter term?
If you can afford the higher payment, a shorter term at a lower rate saves a lot of interest and builds equity faster. Enter a shorter new term here to see the trade-off between the monthly payment and the lifetime interest.