How to use this calculator
Refinancing means replacing a loan with a new one, usually to get a lower rate or a different term. Enter the details of both loans.
- Current balance. What you still owe on the existing loan.
- Current rate. The yearly interest rate on the existing loan.
- Years remaining. How long is left on the existing loan.
- New rate. The yearly rate offered on the new loan.
- New term. The length of the new loan in years.
- Closing costs. The fees charged to set up the new loan.
You see the current payment, the new payment, the monthly savings, the break-even time and the lifetime savings after costs.
Worked example
These are the starting values in the calculator above and the results they give. Change any input to see your own numbers.
- Current balance
- $280,000
- Current rate
- 7.25%
- Years remaining
- 27 years
- New rate
- 6.25%
- New term
- 30 years
- Closing costs
- $5,000
- Monthly savings
- $247.74
- Current payment
- $1,971.74
- New payment
- $1,724.01
- Break-even time
- 1 yr 9 mo
- Lifetime savings after costs
- $13,202
How refinance savings are calculated
Both payments come from the standard loan payment formula. The current payment uses your balance, current rate and years remaining. The new payment uses the same balance with the new rate and new term. These are principal and interest only.
- Monthly savings is the current payment minus the new payment.
- Break-even time is the closing costs divided by the monthly savings. With $3,000 in closing costs and $150 in monthly savings, break-even comes after 20 months.
- Lifetime savings after costs is the total of the payments left on the current loan, minus the total of all payments on the new loan, minus the closing costs.
Break-even months = C ÷ (M1 − M2); lifetime savings = M1 × n1 − M2 × n2 − C- C
- closing costs
- M1
- current monthly payment
- M2
- new monthly payment
- n1
- months remaining on the current loan
- n2
- months in the new loan term
How to read the results
The two savings figures can point in different directions, so look at both.
- Break-even time. If you expect to keep the loan longer than the break-even time, the monthly savings will have covered the closing costs. If you may sell or pay off the loan sooner, the costs may not be recovered.
- Lifetime savings. A positive figure means the new loan costs less overall, even after fees. A negative figure means it costs more.
- A longer new term. Stretching the loan lowers the monthly payment but adds months of interest. It is possible to save every month and still pay more in total.
- A shorter new term. The payment may rise, so monthly savings can be negative, while lifetime savings are large.
The calculator assumes closing costs are paid up front and not added to the new loan. It does not include tax effects or any fee for ending the current loan early. To compare offers with different fees, the APR calculator puts them on the same footing. To see the new loan year by year, use the amortization calculator.
Frequently asked questions
When does it make sense to refinance?
Refinancing tends to pay off when the new rate is lower, the closing costs are reasonable and you plan to keep the loan past the break-even point. It can also be used to shorten or lengthen the term. Whether it makes sense for you depends on your own costs and plans, which is what the results help you weigh.
What is the break-even point on a refinance?
The break-even point is the time it takes for your monthly savings to add up to the closing costs. Divide the closing costs by the monthly savings to get the number of months. After that point, the refinance has paid for itself and further savings are a net gain. Before it, you are still behind.
Can refinancing cost more in the long run?
Yes. If the new loan has a longer term than the time left on your current one, you pay interest for more months. The monthly payment may fall while the total interest rises. Closing costs add to the total as well. The lifetime savings figure shows the overall result. A negative number means the new loan costs more.
What are closing costs on a refinance?
Closing costs are the fees for setting up the new loan. They can include lender fees, an appraisal of the property, title work and other administrative charges. The amount varies by lender, loan size and location. Ask each lender for a written estimate, then enter the total in the calculator to see how it affects break-even time.
Should I refinance to a shorter term?
A shorter term usually means a higher monthly payment but much less interest over the life of the loan, and you are debt free sooner. It suits budgets that can handle the larger payment comfortably. Enter the shorter term in the calculator and compare the new payment with the lifetime savings to see the trade-off.
This calculator gives estimates for education only. It does not know your full situation and is not financial advice. Reviewed and updated November 15, 2026.