You enter your current loan balance, payment, remaining term, and the proposed new rate, term, and closing costs. The tool applies the standard amortization formula to compute the new monthly payment, then subtracts it from your current payment to find monthly savings. Break-even divides closing costs by monthly savings. It does not account for taxes, escrow changes, or prepayment penalties.
A common rule of thumb is that refinancing pays off when you can lower your rate by at least 0.5–1 percentage point and plan to stay in the home past the break-even point. Always compare the lifetime savings, not just the monthly payment.
Refinance closing costs generally run 2–5% of the loan amount and include lender fees, title insurance, appraisal, and recording fees. Some lenders offer "no-cost" refinances that roll these into a slightly higher rate.
Extending the term lowers the monthly payment but typically increases total interest paid over the life of the loan. Check the "Total Savings" line to see whether the lower rate outweighs the longer payback period.
A cash-out refinance replaces your mortgage with a larger loan and gives you the difference in cash. It can be useful for consolidating high-interest debt, but it increases your loan balance and resets the amortization clock.
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.