Is Refinancing Worth It?
A lower rate isn't automatically a win. Find your break-even point before you decide.
Fill in the fields above to see your answer.
If you choose a different new loan term
Term length changes both your monthly savings and your total interest — often in opposite directions:
| New term | Monthly savings | Total interest difference | Verdict |
|---|
How this calculator works
We calculate your current monthly payment and your new monthly payment using standard loan amortization, then find the monthly savings. Dividing your closing costs by that savings gives the break-even point — how many months until the savings cover what you paid to refinance. If that break-even point comes before your remaining term would have ended anyway, refinancing is the better deal financially.
We also compare total interest: what you'd pay keeping your current loan versus what you'd pay on the new one (plus closing costs). This catches the most common refinancing trap — stretching your loan back out to a longer term lowers your monthly payment, but can mean paying substantially more interest over the life of the loan, even at a lower rate. Watch for that warning below if it applies to your numbers.
What this doesn't account for
- Your actual approved rate, which depends on your credit score, income, and lender — this only compares the rates you enter.
- Taxes, insurance, PMI changes, or other costs bundled into some loan payments.
- The possibility you sell or move before the break-even point, which would mean you never recoup the closing costs.
- Cash-out refinancing — this assumes you're refinancing the same balance you currently owe, not borrowing additional money.
- Rate-lock timing and how rates might move while your refinance is in process.
Frequently Asked Questions
How is the refinance break-even point calculated?
The break-even is how many months of lower payments it takes to recover the upfront closing costs. If refinancing saves you $150/month and closing costs are $4,500, the break-even is 30 months. Stay in the loan longer than that and you come out ahead; leave earlier and you haven't recouped the cost.
What closing costs should I include?
Common closing costs include origination fees, appraisal, title insurance, and recording fees — typically 2–5% of the loan amount. Some lenders offer "no-closing-cost" refinances that roll these into the rate or balance; if that's your situation, enter the effective rate increase instead of upfront costs.
How does the remaining loan term affect the result?
If you refinance into a new 30-year loan when you only had 15 years left, you extend your payment period — which can lower monthly payments but increase total interest paid significantly. The calculator compares total interest over the remaining life of the loan so you can see the true long-term cost.
Does refinancing reset the loan term always cost more in total?
Not necessarily — it depends on the rate difference and how long you stay in the loan. If the new rate is substantially lower, total interest savings can outweigh the term extension, especially if you plan to pay extra or sell the property before the full term. The scenario table shows how total cost changes with different assumptions.
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This tool provides general information based on the numbers you enter. It isn't financial or lending advice — actual rates, terms, and fees vary by lender and by your individual credit profile.