How this calculator works
The current payment is based on your balance, rate and years left. The new payment uses the same balance at the new rate and term.
Break-even is the closing costs divided by the monthly saving: the number of months before refinancing pays for itself. If you may move before then, refinancing usually doesn’t pay.
Lifetime saving compares the interest left on your current loan with the interest on the new loan plus closing costs.
Restarting a 30-year term can lower the payment but increase total interest. The calculator flags when that happens.
Worked example
$300,000 balance, 7.25% with 27 years left, refinancing to 6.25% for 30 years with $6,000 costs
- Current payment: $2,112.58. New payment: $1,847.15.
- Monthly saving: $265.43. Break-even: 23 months.
- Compare the lifetime figure: the longer new term adds payments at the end.
Questions people ask
How much does the rate need to drop to refinance?
There is no fixed rule. What matters is the break-even: if you will keep the loan well past it, even a small drop can pay off.
What are typical closing costs?
Often 2% to 5% of the loan, including appraisal, title and lender fees. Some lenders roll them into the loan or rate.
Can I refinance to a shorter term?
Yes. A 15- or 20-year refinance usually raises the payment but can cut total interest sharply.
Sources
Last reviewed October 2, 2026