What to compare

Compare the lower or higher monthly payment with the break-even time and the total interest change. The new principal includes the current balance plus any cash out, while closing costs are used to estimate how long it takes for monthly savings to offset the refinance cost.

Example

If refinancing saves $250 per month and closing costs are $6,000, the simple break-even point is 24 months. A longer new term may still increase lifetime interest.

Common mistakes

Do not treat lower payment as automatic savings. Extending the term can lower monthly payment while increasing total interest.

Limitations

This estimate excludes taxes, insurance, escrow, discount points, prepayment penalties, appraisal differences, ARM adjustments and lender-specific APR disclosures.

References

Consumer Financial Protection Bureau: refinance resources, accessed 2026-05-16.

Last reviewed: 2026-05-16

Before relying on this result

Use this calculator together with the formula, assumptions, limitations and examples on the page. If the topic involves health, tax, lending, investment, legal, safety or current-rate decisions, treat the number as an estimate and check the relevant primary source or professional guidance.

Calculator metadata last reviewed: 2026-05-14.

Refinance Calculator