How to use this refinance calculator
- Enter your current loan: what you owe, your rate, and how many years are left.
- Enter the new offer: the new rate, loan length and total closing costs from your Loan Estimate.
The result shows how many months of lower payments it takes to earn back the closing costs. If you expect to stay in the home longer than that, refinancing likely saves money.
How the break-even point works
Break-even months = closing costs ÷ monthly savings
For example, $6,000 in closing costs with $500 a month in savings breaks even after 12 months. Everything after that is money saved.
Watch out for a longer loan
Refinancing into a new 30-year loan when you have 22 years left lowers your payment partly by stretching it out. You may pay more interest in total even at a lower rate. The total savings figure and the chart above account for this: if the line turns down at the end, those are the extra years of payments.
To avoid this, choose a shorter new term, or keep paying your old payment amount on the new loan.
When refinancing usually makes sense
- The new rate is meaningfully lower than your current one.
- You plan to stay in the home past the break-even point.
- You want to drop PMI, switch from an adjustable to a fixed rate, or shorten your loan.
This calculator compares principal and interest only. Taxes and insurance stay about the same either way. It does not cover cash-out refinancing.
Frequently asked questions
How much lower does my rate need to be to refinance?
There is no fixed rule. What matters is whether you will stay in the home long enough to pass the break-even point. A small rate drop on a large loan can be worth it; a big drop on a small loan sometimes is not.
What are typical refinance closing costs?
They often run 2% to 5% of the loan amount, covering lender fees, appraisal, title insurance and recording fees. Your Loan Estimate lists them line by line.
Can I roll closing costs into the loan?
Often, yes. You avoid paying cash upfront, but you borrow more and pay interest on the costs. Entering them as closing costs here still gives a fair break-even estimate.