Refinance Calculator

When Does Refinancing Make Sense?

A refinance makes financial sense when the long-term interest savings outweigh the closing costs and you plan to stay in the home long enough to pass the break-even point. The break-even point is the number of months it takes for your monthly savings to recover the cost of refinancing.

The Break-Even Rule

If your break-even point is 24 months and you plan to stay in the home for at least 5 years, refinancing is likely worthwhile. If you plan to sell or move within 2 years, the closing costs may not be recovered in time.

Rate & Term vs. Cash-Out Refinance

A rate and term refinance simply changes your rate, term, or both without pulling equity. A cash-out refinance replaces your existing loan with a larger one and gives you the difference in cash. This calculator covers rate and term refinancing. Use the Refinance & HELOC guide for cash-out analysis.

Costs to Consider Before You Refinance

Closing costs on a refinance typically include lender fees, appraisal costs, title insurance, and recording fees, and they usually run a few thousand dollars depending on your loan size and location. Some lenders offer a no-closing-cost refinance, but in that case the fees are usually rolled into the loan balance or offset with a slightly higher interest rate, so it is worth comparing the total cost over time rather than just the upfront number.

Your credit score and current equity position both affect the rate you will be offered on a refinance, much like they do on a purchase loan. Checking your credit report and paying down other debts before applying can help you qualify for a more competitive rate, which directly improves your break-even timeline.

It is also worth thinking about how a new loan term interacts with the time you have already paid on your current mortgage. Resetting to a new 30-year term can lower your monthly payment, but it may extend the number of years until the loan is paid off and increase the total interest paid over the life of the loan, even if the monthly savings looks attractive.

Finally, rates and fees vary by lender, so getting quotes from more than one source before committing to a refinance is one of the simplest ways to make sure you are getting competitive terms. A small difference in rate or closing costs can shift your break-even point meaningfully.

Use this calculator with a few different scenarios, such as a shorter loan term or a slightly higher closing cost estimate, to see how sensitive your break-even point and monthly savings are before deciding whether refinancing fits your plans.