Refinance Calculator
See your monthly savings, the break-even month, and the lifetime cost of a refinance — including the term-reset trap that makes cheaper payments cost more.
Typically 2–5% of the loan.
Saves money on both clocks — the payment drops and the total lifetime cost drops too. The break-even point is the only remaining question.
Two clocks, and lenders only show you one
Every refinance pitch leads with the monthly clock — payment drops, story ends. This calculator runs the second clock too, the lifetime one, because the two regularly disagree and the disagreement is expensive.
The failure mode is the term reset. Take a loan with 27 years left, refinance into a fresh 30, and the payment falls even at the same rate — you have stretched the debt, not shrunk it. The banner above the results calls this out whenever the lifetime math turns against you, and the fix is usually simple — ask the lender to match the new term to your remaining years.
Break-even is a date, not a feeling
Closing costs are paid up front; savings arrive monthly. Divide one by the other and you get the month the refinance turns profitable — commonly two to four years out. The decision then becomes concrete — will you still hold this loan then? Sell or refinance again first, and the closing costs were a donation to the lender.
This same division prices every variant — paying discount points, the “no-cost” refinance that hides fees in the rate, all of it reduces to costs now versus savings monthly.
Reasons beyond the rate
The rate-and-term math is not the whole menu. Refinancing can also drop PMI once equity passes 20%, escape an adjustable rate before it adjusts, or shorten a 30 into a 15 for someone ahead of schedule — that last one raises the payment while saving spectacularly on the lifetime clock. Each still runs through the same two-clock test above.
How this is calculated
Monthly savings = current payment − new payment Break-even = closing costs ÷ monthly savings Lifetime test = interest on new loan + costs vs interest remaining on current loan
Frequently asked questions
- When is refinancing worth it?
- When you clear the break-even point with room to spare — closing costs divided by monthly savings gives the month the refinance pays for itself, and you need to keep the loan meaningfully past it. The old one-percent-rate-drop rule is a shortcut for this same arithmetic.
- What is the term-reset trap?
- Refinancing 27 remaining years into a fresh 30-year loan lowers the payment twice — once from the rate, once from stretching the debt. The stretch is not savings; it frequently adds tens of thousands in lifetime interest behind a smaller monthly bill. Matching the new term to your remaining years avoids it.
- How much does a refinance cost?
- Typically 2 to 5 percent of the balance — origination, appraisal, title and recording, much like the original closing. No-closing-cost refinances just move the fee into the rate or the balance, which the break-even math prices honestly either way.
- Does refinancing hurt my credit?
- Briefly and mildly — a hard inquiry and a new account. Rate-shopping within a short window counts as one inquiry, so gather quotes inside two weeks. The effect fades within months and matters far less than the interest at stake.