How refinance savings are calculated

This calculator computes your current monthly payment and a new monthly payment based on your new rate and term, then compares them to find your monthly savings. It divides your closing costs by that monthly savings to find your breakeven point — the number of months until the refinance has paid for itself — and also compares total interest across both loans.

How to use this refinance calculator

1. Enter your current loan balance, rate, and remaining term.
2. Enter the new rate and term you’re considering.
3. Enter your estimated closing costs.
4. Click Calculate to see your savings and breakeven point.

When refinancing makes sense

Refinancing typically makes the most sense when interest rates have dropped meaningfully since you took out your original loan, when your credit score has improved enough to qualify for a better rate, or when you want to change your loan term — shortening it to pay off faster, or lengthening it to lower your monthly payment.

Factors that affect your refinance savings

• Rate difference: Even a modest rate reduction can produce meaningful monthly savings on a large loan balance.
• Closing costs: These determine your breakeven point — how many months of savings it takes to recoup the cost of refinancing.
• Remaining term vs. new term: Resetting to a new full-length term can lower your payment but increase total interest paid over the life of the loan.
• How long you plan to stay: If you’ll move or pay off the loan before reaching your breakeven point, refinancing may not be worth the upfront cost.

Tips before you refinance

Compare offers from multiple lenders, since closing costs and rates both vary. Calculate your breakeven point and compare it honestly to how long you actually expect to keep the loan. If your goal is simply to pay off debt faster rather than lower your rate, our debt payoff calculator may be a better fit.

Expert insight: what makes refinancing worthwhile in 2026

Mortgage industry guidance circulating in 2026 generally treats a rate drop of at least 0.75 percentage points as the threshold where refinancing starts to make sense, aiming for a break-even point of 36 months or less — under 12 months is considered a clear yes, and lenders suggest treading carefully past 24. For auto loans, refinancing guides generally look for at least a 5% interest rate reduction with fees kept under a few hundred dollars, since the break-even point is typically reached in 3-7 months if those conditions are met.

Further reading: Mortgage Refinance Rates Just Climbed Again — What It Means for Your Break-Even Point

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