Back to Tools
Refinance Calculator
About the Refinance Calculator
Find out whether refinancing a loan will save money by comparing your current payment with a new rate and term, including fees.
How to use the Refinance Calculator
- Enter your Remaining Balance, Current Interest Rate and Years Remaining.
- Enter the New Rate (%), New Term and Refi Fees ($).
- Press Run Scenario Comparison.
Formula and method
Break-even months = Refinance fees ÷ Monthly payment saving. Also compare the total interest of both loans, because a longer new term can cost more overall.
Worked example
Break-even time. If refinancing costs 3,600 and saves 150 a month, you recover the cost after 3,600 ÷ 150 = 24 months. It only makes sense if you stay in the home longer than that.
When to use the Refinance Calculator
- Checking if a lower rate would really save you money after fees.
- Finding out how many months it takes to recover the closing costs.
- Deciding whether to shorten your loan term.
Common mistakes to avoid
- Focusing on the lower payment and ignoring that restarting a 30-year term can raise the total interest.
- Forgetting closing costs and any prepayment penalty on the old loan.
- Refinancing shortly before you plan to move.
Tips
- Refinancing pays off only if you stay in the home past the break-even point.
- Resetting to a new 30-year term can raise total interest even with a lower rate.
Frequently Asked Questions
When the new rate is meaningfully lower and you will keep the loan long enough to recover the fees.
When the savings over the time you will keep the loan are clearly higher than the costs, and you are not simply extending the term.
A new, larger loan that pays off the old one and gives you the difference in cash. It raises your balance, so use it carefully.