Loan Refinancing Calculator
Compare your current loan against a refinanced offer. See monthly savings, total interest savings, and the break-even period to decide if refinancing makes sense.
Current Loan
New Loan
Results
Enter values and click Calculate to see results
How to Use This Loan Refinancing Calculator
Enter your current loan details
Input your remaining balance, current interest rate, and how many years are left on your loan. Find these numbers on your most recent statement.
Input the new loan offer
Enter the refinanced interest rate, new loan term, and any closing costs. Lenders must provide these figures in a Loan Estimate document.
Review the comparison
The calculator shows your monthly savings, total interest savings, and the break-even period when savings exceed closing costs.
Refinancing Break-Even Examples
| Balance | Current Rate | New Rate | Closing Costs | Break-Even | Total Savings |
|---|---|---|---|---|---|
| $200,000 | 6.5% | 5.5% | $4,000 | 20 months | $18,500 |
| $150,000 | 7% | 6% | $3,500 | 22 months | $12,200 |
| $300,000 | 6% | 5% | $6,000 | 26 months | $35,800 |
| $100,000 | 5.5% | 5% | $2,500 | 34 months | $4,100 |
Note: Examples assume refinancing into a new 30-year term. Shorter terms increase monthly savings but may not always maximize total savings.
Understanding Loan Refinancing
Refinancing replaces your current loan with a new one, ideally at a lower interest rate. The new loan pays off the old balance, and you start fresh with new terms. Homeowners refinance mortgages to reduce monthly payments, shorten the loan term, or tap into home equity. The key is whether the savings outweigh the closing costs.
Closing costs typically run 2-5% of the loan amount. On a $200,000 refinance, expect $4,000-10,000 in fees covering appraisal, title search, origination, and other charges. Some lenders offer "no-closing-cost" refinances but roll the fees into a slightly higher rate or add them to the loan balance.
The break-even period tells you how long it takes for monthly savings to cover closing costs. If closing costs are $4,000 and you save $200 per month, break-even is 20 months. Plan to stay in your home beyond this point for refinancing to make financial sense.
When Refinancing Makes Sense
Rate Drop of 0.75% or More
A rule of thumb says refinancing is worth it if you can lower your rate by at least 0.75-1%. Smaller drops may still work for large loan balances or if you plan to stay in the home long-term.
You'll Stay Past Break-Even
If break-even is 24 months but you plan to move in 18 months, refinancing loses money. Only refinance if you expect to keep the loan beyond the break-even point.
Your Credit Score Improved
Better credit since your original loan may qualify you for lower rates. Check your score before applying. Scores above 740 typically get the best mortgage rates.
Switching from ARM to Fixed
If you have an adjustable-rate mortgage and rates are rising, refinancing to a fixed-rate loan provides payment stability. This is more about risk management than pure savings.
Frequently Asked Questions
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