A refinance replaces one loan with another. It can lower the payment, shorten the term, release equity or remove mortgage insurance — but it always costs money up front, and the maths only works if you stay in the loan long enough to earn those costs back.
Monthly saving after refinancing
$190.33
New payment $1,750.72 versus $1,941.05 today, with $4,000 of closing costs.
| Current loan | New loan | |
|---|---|---|
| Interest rate | 6.5% | 5.75% |
| Term | 28 years | 30 years |
| Monthly payment | $1,941.05 | $1,750.72 |
| Total interest | $352,192.21 | $330,258.68 |
| Closing costs | $0.00 | $4,000.00 |
| Total cost of the loan | $352,192.21 | $334,258.68 |
| Net advantage | −$17,933.53 |
Total cost excludes property tax, insurance and HOA dues, which a refinance does not change.
This calculator puts the two loans side by side: payment, remaining term, closing costs and total interest, plus the break-even month and the interest saved (or lost) over the life of the new loan.
Break-even months = closing costs ÷ monthly payment saving. Refinancing $300,000 at 6.5% down to 5.75% over 30 years saves about $143 a month; with $4,000 of costs, that is roughly 28 months before you are ahead.
If you might sell, move or refinance again before that point, the lower payment never pays for itself.
Restarting the clock is the hidden trap. Moving from 22 years remaining to a fresh 30-year term lowers the payment but stretches the balance over more months, so lifetime interest can rise even when the rate falls.
Compare a new term equal to your remaining term to isolate the effect of the rate, then test longer and shorter terms to see the trade-off in payments and total interest.
Add origination fees, discount points, appraisal, title, recording and any lender fees to the closing costs field. Rolled-in costs (financed rather than paid at closing) still cost money because you pay interest on them; if a lender includes them in the new balance, add the amount to the balance field instead.
Each example below was run through the calculator on this page when the site was built, so the numbers match what you see when you enter the same inputs.
Monthly saving after refinancing
$190.33
New payment $1,750.72 versus $1,941.05 today, with $4,000 of closing costs.
The classic rate-and-term refinance: lower payment, higher lifetime interest because the term restarts.
Monthly cost increase
$251.73
New payment $2,192.78 versus $1,941.05 today, with $3,500 of closing costs.
Payment rises, lifetime interest falls sharply — the opposite trade to a payment-focused refinance.
Monthly saving after refinancing
$154.73
New payment $1,125.91 versus $1,280.64 today, with $6,500 of closing costs.
A small rate cut plus high fees plus a longer term is where refinancing quietly loses money.
Closing costs divided by the monthly payment saving. A $4,000 cost and a $143 monthly saving break even after about 28 payments. The calculator shows that month so you can compare it with how long you expect to keep the loan.
Only if the cash-flow relief is worth the extra interest. Matching your remaining term keeps the comparison honest; taking a fresh 30-year term lowers the payment but adds years of interest and rebuilds equity more slowly.
Broad rules of thumb suggest at least a 0.5 to 0.75 percentage point rate drop, a break-even point inside the time you plan to stay, and a clear reason — lower payment, shorter term, removal of mortgage insurance or converting equity to cash for a higher-priority use.
Sometimes. Some lenders offer a no-closing-cost refinance by charging a higher rate; the cost is then spread through interest instead of paid upfront. That trade-off shows up here as a smaller closing cost with a higher new rate.
A refinance application usually involves a credit check, which can trim a few points temporarily. Rate shopping within a short window is normally treated as a single enquiry by scoring models, so comparing several lenders in the same fortnight limits the impact.
Yes, if you have built enough equity. A refinance that brings the loan-to-value ratio to 80% or below typically removes borrower-paid PMI. Enter your current balance in the mortgage calculator alongside the new one to compare the full monthly cost including PMI.
Last reviewed 2026-09-13. This page is an estimate tool, not financial, tax or legal advice.Read the full disclaimer.