Refinance Calculator
Compare your current mortgage against a new rate: monthly savings, total interest difference, and the break-even month where closing costs pay for themselves.
The break-even rule
Refinancing trades an upfront cost for a lower ongoing payment. The deal makes sense if you keep the loan long enough for savings to cover the cost:
Balance $300,000 at 7.25% ($2,047/mo) → refinance to 6.0% for 30 years with $6,000 closing costs.
New payment: $1,799/mo → saving $248/mo
Break-even: 6,000 ÷ 248 ≈ 24 months. Stay longer than 2 years and the refinance pays off.
Watch the term reset
A fresh 30-year loan lowers the payment partly because it stretches repayment out again — which can increase lifetime interest even at a lower rate. The "lifetime difference" figure above compares the total remaining interest of both paths, including closing costs, so you can see the whole picture. If the lifetime number is negative while the monthly number looks good, consider a 15- or 20-year refinance term instead, or keep paying your old payment amount on the new loan (an instant extra-payment plan).
Same starting loan — $300,000 at 7.25%, $2,047/mo, which pays about $437,020 in total interest over its remaining 30-year path — but refinanced into a 15-year term at 6% instead of a new 30-year term.
New payment: $2,532/mo — that's $485 more per month, not less. But total interest on the new loan is only about $155,672.
Net result after $6,000 in closing costs: roughly $275,348 saved over the life of the loan, even though the monthly payment went up. The usual break-even formula (costs ÷ monthly savings) doesn't apply here, since there's no monthly savings to divide by — the question becomes whether the higher payment fits the budget.
New payment and lifetime savings by refinance term
| New term (at 6%) | New payment | Monthly change | Lifetime interest saved |
|---|---|---|---|
| 10 years | $3,331 | +$1,284/mo | $331,264 |
| 15 years | $2,532 | +$485/mo | $275,348 |
| 20 years | $2,149 | +$102/mo | $215,332 |
| 30 years | $1,799 | −$248/mo | $83,488 |
All four options save money over the life of the loan on this $300,000 balance moving from 7.25% to 6% — but only the 30-year term also lowers the monthly payment. The other three trade a higher payment today for dramatically larger lifetime savings, which is the tradeoff a pure "will my payment go down" mindset misses.
Common refinance mistakes
- Judging a refinance only by whether the payment drops. As the table above shows, a 15-year refinance at the same rate can save over three times as much lifetime interest as a 30-year refinance, despite costing more per month.
- Forgetting the clock resets. Early payments on any amortizing loan are mostly interest — refinancing restarts that curve, so even a lower rate can take years to out-earn the reset if the new term is long.
- Ignoring rolled-in closing costs. Financing closing costs into the new balance instead of paying cash increases the amount you owe interest on, which quietly worsens the true break-even math versus what a simple "costs ÷ savings" calculation suggests.
Frequently asked questions
When is refinancing worth it?
When you'll keep the loan past the break-even point (closing costs ÷ monthly savings). $5,000 in costs and $250/mo savings breaks even in 20 months.
How much does it cost to refinance?
Typically 2%–6% of the loan amount for origination, appraisal, title, and recording — roughly $6,000–$18,000 on a $300,000 loan.
Does restarting a 30-year clock cost me money?
It can — paying for longer can outweigh the lower rate. Compare lifetime interest (shown above) or choose a shorter new term.
Can a shorter term save money even with a higher payment?
Yes — refinancing $300,000 at 7.25% into a 15-year, 6% loan raises the payment by about $485/mo but saves roughly $275,348 in lifetime interest after costs. The break-even formula doesn't apply when there's no monthly savings.
What if closing costs are rolled into the loan?
That increases your balance and the interest charged on it over time, which quietly worsens the true break-even math compared to a simple costs ÷ savings calculation based on cash paid upfront.
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Note: Estimates assume fixed rates and consistent payments; actual quotes include fees and points that vary by lender. Not financial advice. Last reviewed: September 2026.