Compare your current loan to a new refinanced loan and see your monthly savings and break-even point.
Rates as of Q2 2025 (example)
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A refinance calculator compares your current loan to a new refinanced loan, showing the difference in monthly payment, total interest over the remaining life of each loan, and how long it takes for the savings from a lower payment to offset your closing costs — the "break-even point." It's a key tool for deciding whether refinancing your mortgage or other loan makes financial sense.
The calculator computes the monthly payment on your current loan (at the current rate, over the years remaining) and compares it to the monthly payment on the new loan (at the new rate, over the new term), both using the standard amortization formula M = P × [r(1+r)n] / [(1+r)n − 1]. The break-even point is calculated by dividing your closing costs by your monthly payment savings — the number of months it takes for the lower payment to "pay back" what you spent on the refinance.
Example: For a $250,000 balance with 25 years remaining at a 7% current rate, refinanced into a new 30-year loan at a 6% rate (example rate — enter your offered rate) with $5,000 in closing costs, the monthly payment could drop noticeably, with a break-even point of roughly a couple of years. (Note: all figures in this example are for illustration purposes only and do not represent actual rates or market conditions.)
Refinancing means replacing your existing loan with a new one, typically to secure a lower interest rate, change the loan term, or switch loan types (such as from an adjustable-rate to a fixed-rate mortgage). Refinancing usually involves closing costs similar to those of an original mortgage — often 2-6% of the loan amount — so it generally makes the most financial sense if you plan to stay in the home (or keep the loan) longer than the break-even period. Extending the loan term as part of a refinance can lower monthly payments but may increase total interest paid over the long run, even at a lower rate.
The break-even point is how many months it takes for your monthly payment savings from refinancing to add up to the closing costs you paid. After that point, you're saving money overall (assuming you keep the loan that long).
No — the default rate is an example only. Refinance rates depend on current market conditions, your credit score, loan-to-value ratio, and the lender, so always use a rate from an actual loan offer.
Not necessarily. If the new loan has a longer term than your current loan's remaining time, you could pay more total interest over the life of the loan even with a lower rate and monthly payment. Compare both total interest figures, not just the monthly payment.
Refinance closing costs often include appraisal fees, origination fees, title insurance, and other lender and third-party fees, commonly totaling around 2-6% of the loan amount. Enter your actual quoted closing costs for an accurate break-even calculation.
Refinancing generally makes the most sense when you can secure a meaningfully lower interest rate, plan to keep the loan longer than the break-even point, and the new terms align with your financial goals (such as paying off the loan faster or lowering monthly payments).
Yes — the same comparison logic applies to refinancing other fixed-rate loans, such as auto loans or personal loans, as long as you enter the correct current balance, rates, and terms for both loans.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only. All rates and examples shown are sample values and do not reflect current or actual market rates. Financial rules and regulations change frequently. Always consult a qualified financial advisor or lender before making any financial decisions.