How to use
Enter your current loan balance, interest rate and remaining term, then the new rate and term, and the closing costs of refinancing. You’ll see both payments, the net savings over the life of the loan and how many months it takes for the monthly savings to cover the costs.
The table below the result puts both loans side by side: payment, term, interest, costs and the total you’ll pay. With a longer new term the payment can drop while the total goes up — in that case the calculator says the costs never pay off.
How it’s calculated
- Monthly savings = current payment − new payment.
- Net savings = remaining interest on the current loan − interest on the new loan − closing costs.
- Break-even = closing costs ÷ monthly savings (rounded up to whole months).
Both loans are treated as fixed-rate with fixed monthly payments.
Example
You owe $250,000 at 7.5% with 25 years (300 months) left; the payment is $1,847.48. Refinancing to 6% for the same 300 months with $4,000 in closing costs gives a payment of $1,610.75 — $236.73 less per month. The closing costs are recovered after 17 months, and net savings come to $67,014.97.
If you reset the term to 30 years (360 months) instead, the payment drops to $1,498.88, but net savings fall to just $10,648.99 because you pay interest for five more years.
FAQ
Is refinancing worth it? It depends on how long you’ll keep the loan: if you sell or refinance again before the break-even point, the closing costs may outweigh the savings.
What about cash-out refinancing? It isn’t modeled here: the calculator compares loans with the same balance. A cash-out comparison needs separate current and new balances.
Results are estimates, not financial advice; your actual rate and costs depend on the lender. See the full schedule in the mortgage calculator, or compare with paying extra in the extra payment calculator.