🔄 Refinance Calculator

When to Refinance — Rate-Drop Scenarios

The break-even point tells you how long you must keep the new loan for the monthly savings to cover the closing costs. The table below models a $300,000, 30-year loan with $4,500 in closing costs.

Note: A common rule of thumb is that refinancing is worthwhile if you can cut your rate by at least 0.5%–1% and you plan to stay beyond the break-even point. Closing costs of $4,500 (1.5% of a $300K loan) are assumed.

Typical Refinance Closing Costs Breakdown

Refinance closing costs usually run 2%–5% of the loan amount. This table shows where that money goes.

Note: Some lenders offer "no-closing-cost" refinances, but they compensate by raising the interest rate. Always compare the total cost (fees + extra interest) over the time you expect to hold the loan.

1. Enter your current loan balance and interest rate.
2. Enter the remaining term on your current loan (in years).
3. Enter the new interest rate you have been offered.
4. Enter the new loan term (in years) and the estimated closing costs.
5. Click Calculate to see the monthly savings and break-even point.

When does refinancing make sense?

Refinancing usually makes sense when you can lower your rate by at least 0.5–1 percent, you plan to stay in the home beyond the break-even point, and the closing costs are reasonable. It also makes sense if you need to switch from an adjustable to a fixed rate for stability, or if you want to shorten your term to build equity faster.

What are typical refinancing closing costs?

Closing costs typically range from 2 to 5 percent of the loan amount. On a 300,000-dollar refinance, that means 6,000–15,000 dollars in fees for appraisal, title insurance, origination and recording. Some lenders offer no-closing-cost refinances, but they compensate by charging a higher interest rate.

Should I refinance to a shorter term?

Refinancing from a 30-year to a 15-year loan usually raises your monthly payment but saves a large amount of total interest over the life of the loan. Use the calculator to compare: enter the same balance with a 15-year term to see how much more you pay per month and how much less you pay in total.

What is a cash-out refinance?

A cash-out refinance replaces your existing mortgage with a larger one and gives you the difference in cash. It can be useful for home improvements or debt consolidation, but it increases your loan balance and may extend your repayment period. Be cautious, as you are converting unsecured debt into debt secured by your home.

This tool is for informational purposes only and does not constitute financial advice. Consult a qualified financial professional for advice specific to your situation.

The break-even point is the single most important number in a refinance decision, so always calculate it before committing. If you plan to move within the break-even period, the refinance costs you money even if the new rate is lower. Watch out for lenders who quote a no-closing-cost refinance — they are not waiving the costs but rolling them into a higher interest rate, which means smaller monthly savings and a longer break-even. When comparing offers, ask each lender for the exact same loan terms (same balance, same term, same type) so the rate quotes are directly comparable. Consider whether extending your term resets the clock on your mortgage: refinancing a 30-year loan that has 22 years remaining into a new 30-year loan may lower your payment but cost more in total interest, even at a better rate. If interest rates have dropped significantly since you bought your home, also check whether you qualify for a streamline refinance, which can have lower costs and less paperwork.