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Refinance Calculator
Is it worth refinancing? This refinance calculator compares your current loan with a new one — the monthly payment, the saving each month, and how many months it takes for the saving to cover the closing costs.
How to use this calculator
- Enter what you still owe, your current rate and the years left.
- Enter the new rate, the new term and the closing costs.
- The calculator shows both monthly payments, the saving, and the break-even point in months.
- Compare the new loan at the same term as the old one too — a longer term can hide extra interest.
Formula and method
Both payments use the standard amortization formula on the same balance. Monthly saving = old payment − new payment. Break-even months = closing costs / monthly saving. Total interest is the sum of all payments minus the balance. A new loan with a longer term usually cuts the monthly payment more, but it can still cost more interest in total because you pay for more years.
Worked example
$300,000 balance, 7.5% now, 25 years left: the current payment is $2,216.97 a month. Refinancing to 6.0% over 30 years gives a payment of $1,798.65 a month — a saving of $418.32 a month. Closing costs of $5,000 pay for themselves in 11.95 months, about 12 months. But total interest only falls from $365,092.06 to $347,514.57, a saving of $17,577.49, because the new loan runs five years longer.
Refinance to 6.0% over 25 years instead — the same term as the old loan: the payment is $1,932.90 a month, a saving of $284.07 a month, break-even is 17.6 months, and total interest falls to $279,871.26, a saving of $85,220.80. The monthly saving is smaller, but the total saving is much bigger.
Frequently asked questions
Is it worth refinancing from 7% to 6%?
It depends on your balance, the closing costs and how long you stay in the home. On a $300,000 balance, a one-point drop saves roughly $200–$400 a month, and the closing costs usually pay for themselves in 12–18 months. On a small balance the saving may never cover the costs. Put your own numbers in above.
How long until refinancing pays for itself?
Divide the closing costs by the monthly saving. In the worked example, $5,000 of closing costs divided by $418.32 a month is 11.95 months — about a year. If you sell or refinance again before then, you lose money on the deal.
Does refinancing to a longer term cost more?
It can. In the example, refinancing to 30 years instead of 25 years saves $134.25 more a month but gives back $67,643.31 of interest saving. Always compare the new loan at the same term as the old one.
What are closing costs when refinancing?
The fees to set up the new loan — lender fees, appraisal, title and recording fees. This example uses $5,000. Your lender's loan estimate lists the real figure; use that number above.
Should I refinance if I plan to move soon?
Usually not. If you move before the break-even point, the closing costs are money lost. In the example, moving within the first 12 months would lose money; staying past that point is when the saving starts.
Sources and method. Standard amortization formula: monthly rate r = annual rate / 12, n = years × 12, payment M = P × r × (1+r)n / ((1+r)n − 1). PMI usually ends when the loan balance reaches 80% of the home value (Consumer Financial Protection Bureau guidance). Affordability uses the 28/36 rule of thumb used by many lenders. Rates in examples are examples only, not live market rates. Results are estimates, not financial advice.
Estimate, not financial advice. This calculator uses the standard amortization formula and the numbers you type in. It is not a loan offer and not financial advice. A lender will check your credit, income and debts and quote its own rate and fees before you borrow.