Should I refinance?
A refinance break-even calculator that counts payment changes, the balance you'd still owe when you sell, and closing costs to tell you how many months until the refi actually pays for itself.
The math: are you ahead when you sell?
The usual shortcut — closing costs ÷ monthly savings — only works when the new loan has the same payoff date as the old one. Change the term and it lies in both directions. So we track your position against keeping the current loan, month by month:
net = payments you didn't make + (old balance − new balance) − closing costs
The break-even is the first month that net turns positive. If you're still ahead in the month you sell, refinance; if not, keep the loan you have.
The catch most calculators ignore
A lower payment from a longer term isn't savings. Resetting a 22-years-left loan to a fresh 30-year drops the payment mostly because you're paying down less principal — and you'll owe that principal back when you sell. Going the other way, a 15-year refi can raise the payment and still leave you well ahead, because the extra goes to principal at a lower rate. Counting the balance owed at sale catches both. Once your old loan would have been paid off, every new-loan payment counts against the refi.
When break-even math lies
- If you roll closing costs into the loan, your savings are smaller than they look (you're paying interest on the closing costs too).
- If the new rate is variable (ARM), this calculator under-rates the risk.
- If you're cash-out refinancing, this calculator is the wrong tool — use a HELOC comparison instead.
If you're still deciding whether to buy in the first place, start with the rent vs buy calculator. If the savings from a refi would go toward debt payoff, the debt vs invest calculator can help you decide where to put the extra cash.
Common questions
How much lower does the rate need to be to refinance?
The old '1% rule' is outdated. What matters is whether you'll stay long enough to pass the break-even point — the month your lower interest has covered the closing costs. A 0.5% drop can be worth it if you're staying 10+ years; a 2% drop isn't worth it if you're moving next year.
Does refinancing to a 30-year loan save money?
A lower payment from a longer term isn't savings. Stretching the loan cuts the payment mostly by paying down less principal, so you owe more when you sell. This calculator counts that higher balance against you, which is why a new 30-year loan can lower your payment and still lose money.
Should I roll closing costs into the loan?
If you roll them in, you pay interest on the closing costs too, which reduces your actual savings. This calculator assumes you pay closing in cash. If rolling in, add the closing amount to your balance and re-run.