🔄 Finance Tool
Refinance Calculator
Compare your current loan with a refinance offer side by side. See your new payment, total interest savings, and exact break-even point in months.
Refinance makes sense when...
Rate drops 0.75%+
Break-even < 24 months
You'll stay 3+ years
Consolidating high-rate debt
Moving before break-even
Current Loan
Your existing mortgage/loan
$
%
$
New Loan (Refinance)
Proposed refinance terms
%
%
Costs & Cash-Out
$
$
Current Loan
$1,767
per month
Interest Rate7.0%
Remaining Term25 years
Total Interest Left$280,085
Total Cost Left$530,085
VS
New Loan (Refinance)
$1,419
per month
Interest Rate5.5%
New Loan Term30 years
Total Interest$261,001
Total Cost (w/ fees)$511,001
29
Break-Even
months to recover costs
$348
Monthly Savings
per month reduction
$19K
Lifetime Savings
total interest difference
Refinancing Looks Worthwhile!
You break even in under 2 years and save money every month. As long as you plan to stay in the loan beyond the break-even point, this refinance makes financial sense.
📊 Cumulative Interest: Current vs Refinanced
Should You Refinance Your Mortgage?
A refinance replaces your existing loan with a new one — usually to get a lower rate, change the term, or access equity. Our refinance calculator shows your new monthly payment, total interest savings, and the critical break-even point: how many months until your savings exceed closing costs. For a full mortgage payment analysis, use our mortgage calculator, mortgage payoff calculator, and amortization calculator.
📐 Break-Even Formula
Break-Even (months) = Total Closing Costs / Monthly Savings
Example: $5,000 in closing costs, $300/month savings → Break-even = 16.7 months (~17 months).
If you plan to move or sell before the break-even point, refinancing costs more than it saves. If you stay longer, every month beyond break-even is pure savings.
✅ When Refinancing Makes Sense
- Rate drops 0.5–1%+ below your current rate
- Break-even is under 24 months and you plan to stay
- Switching from ARM to fixed rate for certainty
- Eliminating PMI by refinancing at 20%+ equity
- Consolidating high-interest debt into lower mortgage rate
- Shortening term to build equity faster
⚠️ When NOT to Refinance
- Planning to sell or move before the break-even point
- Rate difference is less than 0.5% — fees may not be worth it
- Extending term significantly — more total interest paid
- Your loan has a prepayment penalty that erases savings
- You're far into the loan — most interest already paid
- Credit score dropped — you won't qualify for a better rate
💰 Typical Refinance Costs
- Application fee: $0–$500
- Appraisal: $300–$600
- Origination fee: 0.5–1.5% of loan amount
- Discount points: 1 point = 1% of loan
- Title search & insurance: $400–$1,000
- Total typical costs: 2–5% of loan amount
On a $250K loan, expect $5,000–$12,500 in closing costs — always enter these in the calculator.
Frequently Asked Questions
Monthly savings depend on your loan balance, how much the rate drops, and whether the term changes. As a rough guide: on a $250,000 mortgage, dropping from 7% to 5.5% over the same term saves roughly $200–$350 per month. Shortening the term while dropping the rate may increase your payment despite a lower rate. Use our refinance calculator above for your exact scenario.
The break-even point is when your accumulated monthly savings equal the upfront closing costs you paid. Formula: Break-Even Months = Total Closing Costs ÷ Monthly Savings. If you paid $6,000 in closing costs and save $300/month, you break even in 20 months. Before that point, you've spent more than you've saved. After that point, every month is net savings. If you plan to move before the break-even, refinancing doesn't make financial sense.
Rolling closing costs into the loan means no upfront cash outlay, but you'll pay interest on those costs over the life of the loan — increasing your total borrowing cost. Paying out of pocket is cheaper long-term but requires cash on hand. If you have the savings, paying out of pocket gives a shorter real break-even and lower total cost. Use the fee method toggle in our calculator to see the difference for your specific situation.
A cash-out refinance replaces your existing mortgage with a larger loan. The difference between the new loan amount and your current balance is paid to you in cash. For example, if you owe $200,000 on a home worth $350,000, you might refinance for $250,000 — paying off the old mortgage and receiving $50,000 in cash. Common uses: home renovations, debt consolidation, or major expenses. The tradeoff is a higher loan balance and usually a higher monthly payment.
There is no legal limit on how many times you can refinance a mortgage. However, each refinance resets your amortization — meaning early payments are again mostly interest. Refinancing too frequently can mean you never make significant principal progress. Some lenders impose a seasoning requirement (usually 6–12 months from the last refinance) before approving another. Always run the break-even analysis for each refinance to ensure it's genuinely beneficial.