Refinance Calculator
See your monthly savings and break-even point when refinancing a mortgage or loan to a lower rate.
Content updated July 31, 2026
Break-even uses the monthly-payment difference. Lifetime savings compares all remaining payments and includes closing costs, so a lower payment can still cost more if the new term is longer.
Refinancing swaps your existing loan for a new one, ideally at a lower rate. But closing costs mean it only pays off if you keep the new loan long enough. This calculator shows your monthly saving and the break-even point — the month when those savings have repaid the cost of refinancing.
Enter your remaining balance, each loan's own remaining term and rate, and the fees involved. Compare both the monthly break-even and total remaining cost: a lower payment can still cost more if the new term is longer.
The Refinance formula
Break-even months = Refinance costs ÷ (Old payment − New payment)Refinance costs = total closing costs and fees · Old payment = your current monthly payment · New payment = the payment on the new loan (found with the standard amortization formula at the new rate and term). The result is how many months of savings repay the cost.
Worked example
Say refinancing cuts your payment from $1,600 to $1,450 — a $150 monthly saving — and costs $4,500 in fees. Break-even is 4,500 ÷ 150 = 30 months. Keep the loan beyond 2.5 years and refinancing pays off; sell before then and it doesn't.
Assumptions, rounding, and limitations
Assumptions
- Both loans are fixed-rate, fully amortizing loans.
- The entered balance is refinanced in full and closing costs are paid separately.
- Rates, payments, and terms do not change.
Rounding: Payments and comparisons use full precision; displayed amounts are rounded by the selected currency formatter and break-even months round up.
Limitations
- Does not include taxes, insurance, escrow, prepayment penalties, cash-out amounts, or costs financed into the new balance.
- Monthly break-even does not by itself prove that refinancing has a lower lifetime cost.
Sources
- Should I refinance? — U.S. Consumer Financial Protection Bureau
How the break-even point works
Divide your total refinancing costs by your monthly saving and you get the number of months to break even. Stay in the loan longer than that and you're ahead; sell or refinance again sooner and you may lose money on the deal.
Watch out for extending the term. Refinancing a loan you're 5 years into back to a fresh 30 years lowers the payment but can increase total interest — compare the full picture, not just the monthly number.
Frequently asked questions
▶Is it worth refinancing my mortgage?
Generally yes if the new rate is meaningfully lower and you'll keep the loan past the break-even point shown above. If you might move or refinance again soon, the closing costs may not pay off.
▶What are typical refinance costs?
Closing costs often run a few percent of the loan balance, covering appraisal, origination and legal fees. Enter your actual quoted figure for an accurate break-even estimate.
▶What is the break-even point on a refinance?
It's how many months of monthly savings it takes to recoup your closing costs: total costs ÷ monthly saving. Keep the loan past that point and you come out ahead; move or refinance again sooner and you may lose money.
▶How much lower does the rate need to be to refinance?
There's no fixed threshold — it depends on your balance, remaining term and costs. A common rule of thumb is a drop of around 0.5–1%, but the honest test is whether you'll stay in the loan past the break-even point.
▶Does refinancing reset my loan term?
It can. Refinancing into a fresh 30-year term lowers the monthly payment but stretches the debt out again, which can raise total interest even at a lower rate. Compare the full lifetime cost, not just the monthly figure.
▶Can I refinance to pay off my loan faster?
Yes. Refinancing into a shorter term — say from 30 years to 15 — usually raises the monthly payment but cuts total interest sharply and clears the debt sooner, especially when paired with a lower rate.
Learn more
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Open calculator →Disclaimer: Refinance Calculator results are estimates for general information and education only, and are not financial, tax, legal or medical advice. Verify important decisions with a qualified professional.