Refinance Calculator

Two ways. The quick estimate divides closing costs by your monthly savings: closingCosts ÷ monthlySavings. On a $300,000 loan at 7% with 300 months remaining, refinanced to 6% over a new 360-month term with $6,000 in closing costs, that's 18.65 months. The exact figure walks the two loans' real amortization schedules month by month and finds the first whole month where cumulative new-loan payments (plus closing costs) fall to or below cumulative current-loan payments — month 19 in this example, one month later than the estimate because break-even only registers once a full month of savings has actually accrued.

Then there is no break-even — closing costs are never recouped through payment savings alone. For example, refinancing a $200,000 balance at 4% into a new loan at 8% over the same term produces a new payment of $1,672.88/month, higher than the current $1,211.96/month payment — refinancing would only make sense here for another reason entirely (cash-out, removing a co-borrower, or switching loan types), not to save on the payment.

Because a lower monthly payment can still mean paying more in total interest — the term-reset problem. Refinancing 300 months remaining into a fresh 360-month loan resets the amortization clock, so even at a lower rate you may pay more lifetime interest than if you'd kept the original loan to its natural payoff. Always check the lifetime interest delta, not just the monthly payment, before refinancing purely to lower your payment.

No — this is the payment-only side. Refinancing changes your mortgage interest deduction (a lower rate means less deductible interest) and refinance points must be amortized over the new loan's term rather than deducted immediately, unlike points on a home purchase. For the after-tax break-even, see the Refinance Tax Impact Calculator linked above.