Interactive explainer
How the Refinance Calculator works
Use this explainer to understand whether a refinance saves enough each month to recover the closing costs.
Live explainer
Adjust the assumptions
Change inputs here to see the same calculation logic update immediately.
Enter the remaining principal on the current loan.
Use the APR on the loan you have today.
Enter the offered refinance APR.
Use the term for both loans in this simplified comparison.
Enter lender fees and other refinance closing costs.
Immediate results
Monthly Savings
$128.56
Break-Even Time
32 months
Lifetime Savings
$42,280.90
Sensitivity analysis
New rate and closing costs usually drive the decision. A small rate change can move the break-even date by years.
| Input | Scenario | Input value | Output | Output value |
|---|---|---|---|---|
| Loan Balance | -10% | $180,000.00 | Monthly Savings | $115.70 |
| Loan Balance | Current | $200,000.00 | Monthly Savings | $128.56 |
| Loan Balance | +10% | $220,000.00 | Monthly Savings | $141.41 |
| Current Rate | -10% | 5.85% | Monthly Savings | $44.30 |
| Current Rate | Current | 6.5% | Monthly Savings | $128.56 |
| Current Rate | +10% | 7.15% | Monthly Savings | $215.24 |
| New Rate | -10% | 4.95% | Monthly Savings | $196.60 |
| New Rate | Current | 5.5% | Monthly Savings | $128.56 |
| New Rate | +10% | 6.05% | Monthly Savings | $58.60 |
| Loan Term | -10% | 27 Years | Monthly Savings | $124.84 |
| Loan Term | Current | 30 Years | Monthly Savings | $128.56 |
| Loan Term | +10% | 33 Years | Monthly Savings | $132.06 |
| Closing Costs | -10% | $3,600.00 | Monthly Savings | $128.56 |
| Closing Costs | Current | $4,000.00 | Monthly Savings | $128.56 |
| Closing Costs | +10% | $4,400.00 | Monthly Savings | $128.56 |
Formula and calculation model
The tool calculates the monthly payment for both the old and new loan scenarios. **Break-Even Point (Months)** = Closing Costs / Monthly Savings. If you plan to stay in the home longer than the break-even period, refinancing usually makes sense.
Input definitions
Loan Balance
The amount you still owe on your house today. Do not enter the original loan amount.
Current Rate
Use the APR on the loan you have today.
New Rate
Enter the offered refinance APR.
Loan Term
The duration of the new loan. Switching from a 30-year to a 15-year will likely increase your monthly payment but save massive interest.
Closing Costs
Fees charged by the lender to process the new loan. Typically 2-5% of the loan amount.
What the results mean
Monthly savings
The cash-flow difference between current and new payments.
Break-even time
How long savings need to recover refinance costs.
Common mistakes
Ignoring the break-even date
Monthly savings do not matter if you sell before recovering closing costs.
Compare the break-even period with how long you expect to keep the loan.
Restarting the clock without noticing
A new 30-year term can lower payment while increasing total interest.
Review lifetime savings, not only monthly savings.
Scenario and industry examples
Scenario
Fast break-even
Meaningful rate drop with moderate closing costs.
Scenario
Slow break-even
Small rate drop with high fees.
Residential mortgage
Rate drop check
A homeowner compares a quoted lower rate against estimated closing costs.
Household budgeting
Cash-flow relief
A borrower tests whether lower payment is worth the longer payoff timeline.
Glossary
- Break-Even Point
- The moment when the money saved on monthly payments equals the upfront cost of refinancing.
- Rate and Term Refinance
- Changing the interest rate or loan term without taking cash out.
- Cash-Out Refinance
- Taking a larger loan than you owe to pocket the difference in cash.
FAQ clusters
Refinance decision
Does this include every lender fee?
No. The calculator focuses on the main payment math. Review lender disclosures for origination, documentation, title, prepaid interest, and other fees.
Why compare total interest as well as monthly payment?
A lower monthly payment can hide a higher lifetime cost when the repayment term is longer.