How It Works
The calculator estimates the current principal-and-interest payment and compares it with the new loan payment. Closing costs are divided by the monthly savings to find a simple break-even period.
A lower payment is not automatically a lower total cost if refinancing extends the repayment period.
Formula
- M — Monthly payment
- C — Closing costs
- S — Monthly payment savings
Example
Example inputs: Balance $280,000, current 7%, new 6%, 25-year remaining/new term, $5,000 costs.
Result: The result shows the estimated new payment, monthly savings, and months required to recover the closing costs.
Frequently Asked Questions
Does refinancing always save money?
No. Closing costs, the new term, rate, and how long you keep the loan all affect the result.
Why does the new loan term matter?
Resetting to a longer term can lower the payment while increasing the number of months you pay interest.
What costs should be included in the break-even calculation?
Include the closing costs and other upfront costs you actually expect to pay for the refinance. If a cost is rolled into the new loan instead, account for that financing separately because it can change the total cost.
This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.