Refinance Calculator
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What Your Result Means
- New Monthly Payment: The principal-and-interest payment on the refinanced loan based on your new rate and term. Compare this to your current payment to gauge immediate cash-flow relief.
- Monthly Savings: The difference between your current and new payment. A positive number means more money in your pocket each month; a negative number means the refi actually costs more per month (common when shortening the term).
- Break-Even Point: How many months of savings it takes to recoup your closing costs. If you plan to stay in the home longer than this, the refinance generally pays for itself.
- Total Savings (Life of Loan): The net savings over your remaining term after subtracting closing costs. This is the bottom-line number — if it's positive, refinancing saves money over the long run.
How This Calculator Works
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.
Quick Questions
When does refinancing make sense?
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.
What are typical closing costs?
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.
Does extending the term save money?
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.
Should I consider a cash-out refinance?
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.
Sources
- Consumer Financial Protection Bureau — Explore Interest Rates (current rate context and closing-cost guidance)
- Federal Reserve — Refinancing Your Mortgage (break-even considerations, rate-and-term vs. cash-out)
- Investopedia — Refinancing (general overview, types of refinance)
Method & review
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.