Refinance calculator
Enter your current balance, rate and years left, then the new rate, term and closing costs, to see whether refinancing pays and how soon.
- Balance today$280,000.00
- Current payment (6.875%, 27 yr left)$1,903.12
- New payment (5.75%, 30 yr)$1,634.00
- Closing costs-$6,000.00
- Months to earn back closing costsKeep the loan at least this long23
- Interest left on the current loan$336,610.88
- Interest on the new loan$308,240.00
- Lifetime saving after closing costs$22,370.88
How to use it
- Enter the balance, rate and years remaining from your current statement.
- Enter the rate, term and closing costs from the refinance offer's Loan Estimate.
- Read the monthly saving and the break-even: the number of months until the saving has repaid the closing costs.
- Check the lifetime row. A lower payment on a longer term can cost more in total; the row shows the whole picture.
Worked example
$280,000 left at 6.875% with 27 years to go, refinanced to 5.75% over 30 years with $6,000 closing costs paid in cash.
Current payment $1,903.12; new payment $1,634.00, saving $269.12 a month. Closing costs are earned back in 22 months. Over the life of the loans you’d pay $308,240 in interest on the new loan against $336,611 left on the old one, a lifetime saving of $22,371 after costs, even with three extra years of payments.
How it's calculated
current payment = level payment on the balance at the current rate over the months left
new payment = level payment on the balance (plus closing costs if financed) at the new rate over the new term
monthly saving = current payment − new payment
break-even months = closing costs paid in cash ÷ monthly saving, rounded up
lifetime saving = interest left on the current loan − interest on the new loan − closing costs
Interest totals are payment × months − principal. Taxes and insurance are the same either way, so they’re left out.
FAQ
How much lower does the rate need to be?
The old rule of thumb was a full point, but the real test is the break-even. If you'll keep the house longer than the break-even months, the refinance pays. A half-point drop on a large balance can break even in under two years.
Is a no-closing-cost refinance a good deal?
It's a trade: the lender covers the costs and charges a slightly higher rate, or adds them to the balance. Enter the higher rate here, or turn on the roll-in toggle, and compare the lifetime row rather than the payment.
Should I refinance into a shorter term?
If you can afford the payment, a 15-year refinance usually cuts total interest dramatically. Pick 15 years in the new term and read the lifetime saving; the monthly figure may go up while the lifetime saving is large.
What about the years I've already paid?
They're in the balance. Refinancing restarts the clock, which is why the calculator compares interest on the remaining years of the old loan with the full new loan. The lifetime row already accounts for the extra years.