Refinance Calculator — break-even, monthly savings & lifetime cost

How it works

Refinancing swaps your current loan for a new one at a new rate and term. The new monthly payment comes from the standard amortization formula applied to the new balance; subtract it from your current payment to get the monthly saving. The break-even point is the upfront closing costs divided by that monthly saving — the number of months before the savings pay back the cost of refinancing. Because a new 30-year term restarts the clock, a lower payment can still mean more total interest over the life of the loan.

Worked example

Suppose refinancing lowers your monthly payment by $200 and costs $5,000 to close. Dividing the cost by the saving gives the break-even: $5,000 ÷ $200 = 25 months (Chase) — the point after which the lower payment has repaid the closing costs. This calculator does the same for your own loan: it computes the new payment from the amortization formula, subtracts it from your current payment for the monthly saving, then divides your closing costs by that saving. It also flags when a longer new term raises your total interest even as the monthly payment falls, so the monthly win doesn't hide a lifetime cost.

Current vs. new loan (default scenario)

Break-even method: closing costs ÷ monthly savings (Chase). Every figure recomputes live from your own inputs.

Frequently asked questions

What does it mean to refinance a mortgage?

Refinancing replaces your existing mortgage with a new loan — usually to get a lower interest rate, a different term, or to take cash out of your home equity. The new loan pays off the old balance, and you begin payments on the new one.

How is the break-even point calculated?

Divide your total closing costs by the amount your monthly payment drops. Chase gives the worked case: $5,000 in closing costs and a $200 monthly saving break even in 25 months ($5,000 ÷ $200). Past the break-even month, the lower payment is money saved.

What does the break-even point tell you?

It is the month after which the accumulated monthly savings have exceeded the closing costs; before it, the refinance has cost more than it has saved so far. If the loan is sold or refinanced again before that month, the closing costs outweigh the savings; a larger rate drop or lower closing costs bring the break-even sooner.

Does a lower rate always save money overall?

No. A lower rate cuts the monthly payment, but if the new loan re-extends the term — say, resetting a loan with 25 years left back to 30 — you can pay more total interest over the life of the loan even while paying less each month. This calculator shows both so you can weigh them.

What are closing costs?

The upfront fees to set up the new loan — appraisal, origination, title, and recording — typically a few percent of the loan. You can pay them out of pocket or roll them into the loan; rolling them in removes the upfront cost but raises the balance you finance.

What is the difference between rate-and-term and cash-out refinancing?

A rate-and-term refinance keeps the balance the same and only changes the rate or term. A cash-out refinance raises the new loan above your current balance and gives you the difference in cash, which increases both the payment and the total interest.

How accurate is this, and what doesn't it include?

The payment and break-even math are exact for fixed-rate loans. It does not include property-tax or insurance escrow, private mortgage insurance, points, adjustable-rate changes, or the exact closing costs your lender quotes — treat the result as a close estimate and confirm against your official loan estimate.