| Current Loan | New Loan | Difference | |
|---|---|---|---|
| Monthly payment | ??? | ??? | ??? |
| Interest rate | ??? | ??? | ??? |
| Loan term remaining | ??? | ??? | ??? |
| Total interest paid | ??? | ??? | ??? |
| Total cost (principal + interest) | ??? | ??? | ??? |
| Closing costs | ??? | ??? | ??? |
Break-Even Analysis
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Should You Refinance Your Mortgage?
Refinancing replaces your existing mortgage with a new loan ??? typically to get a lower interest rate, reduce your monthly payment, shorten your loan term, or switch from an adjustable-rate to a fixed-rate mortgage. This calculator tells you the three numbers that matter most: your new monthly payment, your monthly savings, and the break-even point.
The Break-Even Point
The break-even point is how many months it takes for your cumulative monthly savings to exceed the closing costs you paid to refinance. If you plan to stay in the home longer than the break-even period, refinancing is likely worth it. If you're planning to sell or move before then, the upfront costs may outweigh the savings.
Example: If closing costs are $6,400 and you save $200/month, your break-even is 32 months (about 2.7 years). If you stay 5+ years, you come out ahead by thousands.
When Refinancing Makes Sense
- Your new rate is at least 0.5%???1% lower than your current rate
- You plan to stay in the home past the break-even point
- Your credit score has improved since your original loan
- You want to switch from an ARM to a fixed-rate loan for stability
- You want to shorten your term (e.g., 30-year to 15-year) to pay off faster
When It Might Not Make Sense
- You're planning to sell or move within 2???3 years
- You've already paid most of the interest on your current loan (later years of a mortgage are mostly principal)
- Closing costs are very high relative to your monthly savings
- Your credit score has dropped since your original loan
- You'd be extending a 15-year loan back to 30 years, dramatically increasing lifetime interest
Financing Closing Costs
You can roll closing costs into your new loan balance rather than paying them upfront. This reduces out-of-pocket cost but increases the loan amount, raises your monthly payment slightly, and means you're paying interest on the closing costs over the life of the loan. Our calculator shows both scenarios ??? toggle "Finance closing costs?" above to compare.
