Calculate Refinance Savings
Current Loan
Monthly Payment
Refinanced Loan
Monthly Payment
Key Info
When should I refinance?
When new rate is 0.5-1% lower than current rate, and you'll stay in home long enough to break even. If you plan to move in 2 years and break-even is 3 years, don't refinance.
What are typical refinance costs?
$2,500-$5,000 on a $250K loan. Includes appraisal, origination fee, title, processing. More expensive than purchase mortgage because less profit for lender.
Cash-out refinance vs rate-and-term?
Rate-and-term: Only change rate/term, no cash out. Simple, lower fees. Cash-out: Borrow more than owed, take difference as cash. Higher costs and rates but accesses equity.
What This Calculator Estimates
This calculator estimates whether refinancing may lower your monthly payment and whether the interest savings may justify the closing costs. It compares the current loan payment with a new loan payment and highlights break-even timing, interest savings, and net savings.
Formula / Method Used
The page calculates the current loan payment and the refinanced loan payment with the standard amortized loan formula using the same remaining balance and term. Monthly savings are the difference between those payments, break-even months equal closing costs divided by monthly savings, and net savings equal estimated interest savings minus closing costs.
Worked Example
If a remaining mortgage balance is $250,000, the current rate is 7.0%, the new rate is 5.5%, the remaining term is 25 years, and closing costs are $5,000, the calculator compares the two payments and shows how long it may take for the payment reduction to offset the refinance costs.
How to Interpret the Result
A shorter break-even period usually makes refinancing easier to justify if you expect to keep the loan long enough. Net savings help you compare the benefit after costs, while the payment comparison shows whether the refinance improves monthly cash flow.
Common Mistakes
- Ignoring closing costs while focusing only on the lower rate.
- Refinancing with a break-even period longer than the expected time in the home.
- Assuming the estimate covers cash-out refinancing or tax effects.
- Forgetting that a new term can change total interest even if the payment drops.
Related Calculators
Frequently Asked Questions
What does this refinance calculator estimate?
It estimates break-even timing, monthly payment change, total interest savings, and net savings after closing costs when you compare a current loan with a refinanced loan.
What does break-even mean in a refinance?
Break-even is the number of months it may take for monthly savings to recover the refinance closing costs.
Can a lower rate still produce weak savings?
Yes. Small rate reductions, high closing costs, or a short remaining time in the home can reduce the benefit of refinancing.
Does this calculator cover cash-out refinancing?
No. The estimate compares rate-and-term style payment assumptions and does not model cash-out proceeds, taxes, or equity withdrawal costs.
When should I rerun the refinance estimate?
Rerun it when loan balance, market rate, remaining term, or expected closing costs change.
General Disclaimer
This calculator provides refinance estimates only. Actual loan pricing, lender fees, escrow requirements, taxes, and underwriting decisions may change the real outcome. Results are estimates only.
Last updated: May 2026