Refinancing replaces your current mortgage with a new one, ideally at a lower rate or a term that fits your goals better. But refinancing is not free — closing costs can run thousands of dollars — so the real question is whether the monthly savings outrun those costs before you sell or move. This calculator answers that by showing your new payment, your monthly savings, and your break-even point.
How the comparison works
Enter your current loan balance, rate, and remaining term, then the new rate and term you are considering along with estimated closing costs. The calculator computes both payments, the monthly difference, and how many months of savings it takes to recover the closing costs — your break-even point.
The break-even point explained
Break-even months = total closing costs ÷ monthly savings. If refinancing costs $6,000 and saves you $250 a month, you break even in 24 months. Stay in the home past that point and the refinance pays off; sell before it and you lose money on the deal.
A worked example
Say you owe $300,000 at 7.5% with 27 years left, and you can refinance to 6.25% over 30 years. Your payment might drop from about $2,150 to $1,847 — a $303 monthly saving. With $7,000 in closing costs, you break even in roughly 23 months. If you plan to stay at least a few more years, the refinance clearly makes sense.
Things to watch before you refinance
- Resetting a 27-year loan back to 30 years lowers the payment but can increase total interest — consider matching your remaining term.
- A general guideline is to refinance when you can cut your rate by at least 0.5–1%, but the break-even math matters more than any rule.
- Cash-out refinances raise your balance and payment — use them cautiously and only for high-value purposes.
- Ask lenders for a no-closing-cost option and compare the slightly higher rate against paying costs upfront.