How to use the refinance calculator
Under Current loan, enter what you still owe, the interest rate and the number of months left. Under New loan, enter the rate you were offered, the new term in years and the closing costs. Then choose whether the closing costs are paid upfront or rolled into the new loan.
Press Calculate to see both monthly payments, the monthly savings, the break-even time and the lifetime savings. The details section compares the two options side by side: loan amount, payment, number of payments, interest remaining, closing costs and total cost.
How the comparison works
Both payments use the standard formula M = P × r / (1 − (1 + r)^−n), where P is the balance, r the monthly rate and n the number of months.
- Monthly savings is the current payment minus the new payment.
- Break-even is the closing costs divided by the monthly savings, rounded up to a whole month. It shows how long the lower payment takes to pay back what you spent to refinance.
- Lifetime savings compares every payment left on the current loan with every payment on the new loan plus any closing costs paid upfront. When costs are rolled in, they are already part of the new payments.
If the lifetime figure is negative, the result says so clearly: refinancing would cost more in total, even if the monthly payment goes down.
Worked example
You owe 200,000 at 6% with 300 months left, so you pay 1,288.60 a month. A new 25-year loan at 4.5% with 4,000 in closing costs paid upfront has a payment of 1,111.66. You save 176.94 a month and recover the closing costs in 23 months. Interest left on the current loan is 186,580.84, against 133,499.49 on the new one, so you save 49,081.35 overall.
Stretching a loan of the same size from 20 years left at 5% to a new 30-year loan at 4.5% with 5,000 in costs drops the payment from 1,319.91 to 1,013.37, but you would pay 53,034.67 more in total.
Good to know
- A longer new term lowers the payment but often raises the total cost. Compare the lifetime figure, not just the payment.
- If you may sell or pay off the loan before the break-even point, refinancing may not be worth it.
- Results assume fixed rates and no extra payments, and ignore taxes and insurance. Treat them as estimates, not financial advice.