Refinance Savings Calculator
A refinance trades closing costs today for lower payments tomorrow. Enter your current loan and the new offer to find the break-even point and whether the trade is worth it over the time you will keep the home.
Your results
Charts & visualization
Cumulative cost over time
Refinancing starts higher because of closing costs, then crosses below if you hold long enough.
Every chart’s underlying numbers are available as text — use the “view as table” control under each chart.
How it works
Three numbers drive every refinance decision:
- Cash-flow savings — old payment minus the new loan’s payment.
- Break-even point — closing costs divided by monthly savings. Before that month you are behind; after it, ahead.
- Net lifetime savings — total cost of finishing the old loan versus the new one including fees. This catches the classic trap of restarting a 30-year clock: the payment drops but lifetime interest can rise.
The cumulative-cost chart shows both paths crossing at break-even. If you might sell or pay off before the crossover, refinancing probably loses money.
Formula used
Monthly savings— old payment − new paymentNet savings— (old payment × remaining months) − (new payment × term + closing costs)Rule of thumb— do not refinance unless you will keep the loan past break-even
Example calculation
Dropping a $320,000 balance from 7.25% to 6% cuts the payment from $2,240 to $1,919 — about $322 per month. With $3,200 in closing costs, break-even arrives in roughly 10 months. Staying past that point nets about $45,402 across the life of the loans, though moving to a fresh 30-year term shifts the final payoff date later.
Assumptions & limitations
- Both loans are fixed-rate and held to payoff unless you sell earlier.
- Closing costs are paid upfront, not rolled into the new balance.
- Escrowed taxes and insurance continue unchanged either way.
- The opportunity cost of cash spent on closing is not modeled.
- A no-cost refinance (closing = 0) breaks even immediately but carries a higher rate.
Results are planning estimates based on your inputs and the stated assumptions — not financial advice or a loan offer. Verify important figures with your lender or advisor.
Frequently asked questions
How much lower should rates be to refinance?
A common rule is at least 0.5%–1%, but the real test is break-even time versus how long you will keep the loan. A smaller drop can still win with low fees and a long horizon.
Is a no-closing-cost refinance better?
You pay for it indirectly through a higher rate. If you expect to move or refinance again within a few years, that trade can favor you; staying long-term usually favors paying costs upfront for the lower rate.
Why did lifetime savings come out negative despite lower payments?
Restarting a 30-year clock adds years of interest the shorter remaining term would never accrue. Compare net lifetime savings rather than monthly relief alone, or choose a shorter new term to preserve your payoff date.
Can I roll closing costs into the loan?
Yes, many lenders allow it. That preserves cash but increases the balance, slightly shrinking the savings shown here.