Calculate your monthly savings from refinancing, your break-even point, and total lifetime interest savings. See if refinancing makes financial sense.
Input your current loan balance, current interest rate, remaining term in months, and current monthly payment.
Add the new interest rate, new loan term, and total closing costs for the refinance.
View your monthly savings, the number of months to break even on closing costs, and total lifetime interest savings.
Refinancing typically makes sense when you can reduce your rate by 0.5% or more, you plan to stay in the home long enough to recoup closing costs (break-even), and your credit/income position is good. Even a 0.25% rate reduction can save significant money on large loans.
Break-even = closing costs / monthly savings. If closing costs are $6,000 and you save $300/month, break-even is 20 months. If you plan to stay beyond 20 months, refinancing makes financial sense. Our calculator shows this exact number for your inputs.
Refinancing closing costs typically run 2-5% of the loan amount — $3,000 to $10,000+ on most loans. Costs include origination fees, appraisal, title insurance, and government fees. Some lenders offer no-closing-cost refinances by rolling costs into the rate.
Cash-out refinancing (borrowing more than your balance and taking the difference as cash) resets your amortization clock and increases your loan amount. It makes sense for high-ROI uses like home improvements or debt consolidation at much higher rates — not for vacations or cars.
If you refinance a 30-year loan into a new 30-year loan, yes — your clock resets. This lowers monthly payments but can increase total interest paid. Consider refinancing into a shorter term (15 or 20 years) to avoid adding years to your payoff date.
A no-closing-cost refinance rolls the closing costs into your loan balance or charges a slightly higher rate. You pay nothing upfront but owe more (or pay more monthly). It makes sense if you plan to move or refinance again within a few years.
Credit score significantly affects your new rate. Improving from 680 to 760 can reduce your rate by 0.5-1.0%. If your score has improved since your original loan, refinancing might get you a materially better rate even if market rates have not moved.
A common rule of thumb is to refinance when rates drop 1% below your current rate. However, the real test is the break-even analysis: if monthly savings justify closing costs before you plan to move, refinancing makes sense regardless of the absolute rate change.
