Refinance Calculator
Compare your current mortgage with a refinance offer: the new payment, the monthly saving, and the break-even month when the saving has repaid the closing costs.
Break-even: the only refinance question that matters first
A lower rate always sounds like a win. It is not, until the monthly saving has repaid what the refinance cost. Break-even divides the closing costs by the monthly saving — if you will keep the loan past that month, you profit from then on; if life moves you sooner, the refinance was a donation.
Break-even months = closing costs ÷ (old payment − new payment)
Example: refinancing cuts your payment by $180 a month and costs $4,500 to close. Break-even is month 25. Sell or refinance again in year two and you lost money at a 'lower rate'.
The term-reset trap
Refinancing a loan with 23 years left into a fresh 30-year term cuts the payment mostly by stretching the debt, not by the rate. Total interest can rise even as the rate falls. This page shows lifetime interest on both paths so the stretch is visible; comparing your new loan over your remaining years — not just its sticker term — is the honest test.
How this is calculated
Both loans are amortized in full from the same current balance: the old at its rate over your remaining years, the new at its rate over its term. Monthly saving = old payment − new payment; break-even = closing costs ÷ monthly saving. Lifetime saving = old remaining interest − (new total interest + closing costs). The simulation is month-by-month with no intermediate rounding.
Frequently asked questions
When is refinancing clearly worth it?
When the rate drop is meaningful (roughly three-quarters of a point or more on a large balance), the break-even lands well inside how long you expect to keep the home, and the term is not silently extended.
What about a no-closing-cost refinance?
The costs are real; they are paid through a higher rate instead. That can still be the right trade for a short expected stay — compare its break-even (immediate, but a smaller monthly saving) against the paid-cost version.
Should I roll closing costs into the loan?
It preserves your cash but you then pay interest on the costs for decades, and the break-even math changes. This calculator treats costs as paid in cash, the conservative reading.
Does refinancing hurt my credit?
A hard inquiry and a new account cause a small, temporary dip. Rate-shopping within a short window (typically 14–45 days) counts as a single inquiry for scoring.
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