Refinancing means replacing your current home loan with a new one — usually to get a lower interest rate. But a lower rate only helps if the savings beat the closing costs. Our free refinance calculator compares your current loan with a new one and tells you exactly how much you would save each month, how many months it takes to break even, and how much interest you save over the life of the new loan.
Educational estimates only, not financial advice.
How to use this calculator
- Enter your current loan — the remaining balance, your current interest rate and the years left on it.
- Enter the new loan — the new interest rate and the new term (for example, 30 years).
- Enter the closing costs — the fees to set up the new loan. If you don’t know them yet, try $5,000 as a rough estimate.
- Read the result — your new monthly payment, how much you save each month, the break-even point in months, and the total interest saved over the life of the new loan.
How it works
The calculator works out the monthly payment for both loans using the standard fixed-rate formula, then compares them. The monthly saving is your current payment minus the new payment. The break-even point is the closing costs divided by the monthly saving — the number of months before the savings have paid back what refinancing cost you. The total interest saved is the interest on your remaining current loan minus the interest on the new loan.
Worked example: a $280,000 balance at 7.5% with 25 years left. Your current payment is about $2,069 a month. Refinance to a new loan at 6.0% over 30 years with $5,000 in closing costs, and the new payment is $1,678.74 a month — a saving of $390.43 a month. Break-even: $5,000 ÷ $390.43 = 12.81 months, so the refinance pays for itself in just over a year. Total interest saved over the life of the new loan: $11,405.66.
Frequently asked questions
When is refinancing worth it?
When the monthly saving beats the closing costs well before you plan to move or sell. A common rule of thumb is a rate drop of about 1 percentage point — but the break-even number matters more than the rule. If you break even in a year and plan to stay for ten, refinancing usually makes sense.
What are closing costs?
The fees to set up the new loan — typically 2–5% of the loan amount. You can pay them upfront or roll them into the loan. Rolling them in means you pay interest on them too, so the calculator’s break-even is cleaner when you pay them upfront.
Does refinancing restart my loan term?
Yes — if you take a new 30-year loan, the clock starts again, which can mean more total interest even at a lower rate. A shorter term (15 or 20 years) usually means a higher monthly payment but much less interest overall. Compare both in the calculator.
Does refinancing hurt my credit score?
A hard inquiry can dip your score a few points for a short time. Rate-shopping within a short window (usually 14–45 days) is normally counted as a single inquiry, so compare lenders quickly.
Can I refinance with a low credit score?
It is harder, and the rate you are offered will be higher. Improving your score first usually saves more than refinancing early — see what a credit score is and why it matters.
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