Refinance Calculator
Refinancing replaces your existing loan with a new one — usually to capture a lower interest rate, a smaller monthly payment, or both. But a refinance is rarely free: closing costs have to be earned back through the savings, and a new loan often resets the clock to a fresh full term. This calculator shows the new monthly payment, the break-even point on your closing costs, and the figure most refinance tools hide: whether resetting the term actually increases your total interest even when the rate goes down.
- New payment
- $1,678.74
- Old payment
- $2,069.18
- Break-even
- 11 mo
- Lifetime interest difference
- -$16,405.66
You break even on the 4,000 closing costs in about 11 months, and the lower rate more than offsets the longer term: total lifetime interest falls by about 16,406. Watch this figure if you extend the term further — a long enough new term can flip it positive.
How it works
The tool re-amortizes the same outstanding balance twice. The first uses your current rate over the months you have left. The second uses the new rate over the new term you are considering. The gap between the two monthly payments is your monthly saving.
Dividing your closing costs by that monthly saving gives the break-even point — the number of months you must keep the new loan before the savings have repaid what the refinance cost you. If you sell or refinance again before then, you lose money on the deal.
The subtle part is lifetime interest. A lower rate pulls your total interest down, but stretching the loan back out to a fresh 25- or 30-year term pushes it back up, because you pay interest over more years. The calculator computes total interest for both loans and reports the difference, so you can see which effect wins. Sometimes a "lower rate" refinance still costs you more in the end.
New payment and old payment each use the standard amortized formula PMT = P · i · (1 + i)^n / ((1 + i)^n − 1) on the same balance at their own rate and term. Monthly saving = old payment − new payment. Break-even months = closing costs ÷ monthly saving. Lifetime interest for each loan = payment × number of months − balance, and the difference reveals whether the refinance truly costs less over its whole life.
Worked example
You owe 280,000 at 7.5% with 25 years (300 months) left, giving a payment of about 2,069 a month. You refinance to 6% over a fresh 30 years (360 months), dropping the payment to about 1,679 — a monthly saving of roughly 390. With 4,000 in closing costs you break even in about 11 months. Here the rate cut is large enough to win overall: total lifetime interest falls from about 340,800 to about 324,300, a saving of roughly 16,400. Had the new rate been only slightly below 7.5%, that same 5-year extension would have flipped the lifetime interest higher despite the lower monthly payment.
Things to watch out for
If the new payment is the same or higher than your current one, there is no monthly saving and no break-even point — the calculator says so rather than showing an impossible payback. Closing costs of zero make the break-even instantaneous, but the lifetime-interest comparison still matters. Keeping the new term equal to or shorter than your remaining term is the cleanest way to lock in a rate cut without re-extending the loan; this tool lets you set the new term explicitly so you can test a like-for-like comparison instead of a default 30-year reset.
Frequently asked questions
What is the break-even point on a refinance?+
It is the number of months you must keep the new loan before the monthly savings have repaid the closing costs. Before that point you are still behind on the deal; after it, the savings are genuinely yours. If you expect to move or refinance again before break-even, the refinance likely is not worth it.
How can a lower rate cost me more in total?+
By resetting the term. A lower rate reduces interest per year, but spreading the balance back over a fresh full term means more years of interest. If the extension outweighs the rate cut, your total lifetime interest rises even though each monthly payment is smaller. This calculator shows that figure directly.
Should I match the new term to my remaining term?+
If your goal is to cut interest, yes — refinancing into a term equal to or shorter than what you have left captures the lower rate without re-extending the loan. If your goal is breathing room in your monthly budget, a longer term lowers the payment, but accept that it usually raises total interest.
Are closing costs always worth paying upfront?+
Not always. Compare the break-even months against how long you realistically expect to keep the loan. Some lenders offer "no-cost" refinances that fold the fees into a slightly higher rate instead — useful if you plan to move soon, but more expensive if you stay for the long haul.
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Disclaimer: This calculator is for educational and informational purposes only and provides estimates, not financial advice. Interest rates, taxes, fees, and local rules vary and change over time. Confirm figures with a qualified professional before making any financial decision.
Last reviewed: 2026-06-22