Refinance Savings Calculator

Your mortgage is at 7.25%. Rates dropped to 6%. You call a lender, get excited about the lower payment, and rush to refinance. Then you see $8,000 in closing costs. At $180/month savings, it takes 44 months just to break even. If you move in 3 years, you lose money. This refinance savings calculator does that math upfront—before you commit.

The decision isn't just "are rates lower?" It's whether the monthly savings justify the upfront cost, given how long you'll keep the loan. A 1% rate drop with $6,000 closing costs looks different if you're staying 10 years versus selling in 2.

Run the numbers here. Enter your current loan, the new rate you've been quoted, and the closing costs. You'll see your breakeven point, total interest saved (or lost), and whether refinancing makes financial sense for your timeline.

Breakeven is simple: divide closing costs by monthly savings. If refinancing costs $6,000 and saves you $200/month, breakeven is 30 months. Stay longer than 30 months, you profit. Leave sooner, you lose.

Why this matters: Refinancing resets your loan. You pay closing costs now in exchange for future savings. If life changes—job relocation, downsizing, divorce—and you sell before breakeven, you've paid thousands for nothing.

A good rule: if breakeven is under 24 months and you're confident you'll stay 5+ years, refinancing usually makes sense. If breakeven is 36+ months and your timeline is uncertain, think twice.

You're extending the term significantly: Going from 20 years remaining to a new 30-year mortgage lowers payments but adds 10 years of interest. Even at a lower rate, the extra decade of payments often costs more than you save.

The rate drop is small and fees are high: A 0.5% rate reduction with $8,000 in closing costs can take 5+ years to break even. If you might move before then, you're paying to lose money.

You're close to paying off the loan: With 8 years left on a mortgage, refinancing to a new 15 or 30-year term rarely makes sense. You're almost done—why restart?

Rolling closing costs into the loan: Adding $7,000 in costs to your balance means paying interest on those costs for decades. On a $300,000 loan at 6% for 30 years, that $7,000 becomes roughly $15,000 over time.

Uncertain timeline: If there's any chance you'll sell or refinance again within 3 years, be very careful. Breakeven needs to happen before life changes.

Monthly payments use standard amortization:

Where P = principal (loan balance), r = monthly rate (APR ÷ 12), n = total payments

Breakeven: Total closing costs divided by the difference between current and new monthly payment.

Total interest comparison: (Remaining payments × current payment) versus (new term payments × new payment + closing costs). The difference shows true savings or loss.

Assumptions: Fixed rates for both loans, closing costs paid upfront (not rolled into loan), no prepayment penalties, and consistent on-time payments.