📌 Current Loan
✨ Refinanced Loan
| Current Loan | Refinanced Loan | Difference | |
|---|---|---|---|
| Monthly Payment | $— | $— | — |
| Total Interest (remaining) | $— | $— | — |
| Total Cost (incl. fees/points) | $— | $— | — |
🏦 When Does Refinancing Make Sense?
Loan refinancing replaces your existing loan with a new one — typically to lower your interest rate, reduce monthly payments, shorten the term, or access cash (cash-out refi). Our calculator compares your current loan vs. a refinanced loan including points and closing fees.
📈 Key Metrics Explained
Monthly Payment Difference: Lower payments free up cash flow but may extend the term.
Total Interest Savings: The biggest benefit of refinancing to a lower rate.
Break-even Point: How many months it takes for monthly savings to offset closing costs. If you plan to stay in the home / keep the loan beyond the break-even point, refinancing is worth it.
Points: Prepaid interest (1 point = 1% of loan amount) that lowers your rate. Recoverable over time.
🧮 How to Use This Calculator
1️⃣ Enter your current loan details — remaining balance, current monthly payment, interest rate, and remaining years.
2️⃣ Input new loan terms: term length, new interest rate, points (if any), and other closing costs. Add cash-out amount if you plan to take equity out.
3️⃣ Click "Calculate Refinance Benefits" to see a side-by-side comparison and break-even timeline.
✅ The calculator estimates total interest over the remaining life of current loan versus new loan (assuming you pay as scheduled).
💡 Important: For mortgages, the break-even period is key. If you sell or move before that date, refinancing may not pay off.
✅ Example Scenario
Current loan: $250,000 at 7% with 20 years left. Monthly ~$1,938. New loan: 20 years at 6% with 2 points ($5,000) + $1,500 fees. New payment ~$1,791. Monthly savings $147. Break-even ≈ 44 months. If you keep the loan > 3.7 years, you save money.
⚠️ Common Pitfalls
• Extending the term could lower payments but increase total interest.
• Cash-out refinancing increases your loan balance and may raise your rate.
• Prepayment penalties on your current loan — check before refinancing.
• Adjustable-rate mortgages: refinancing to a fixed rate can provide stability.
This calculator assumes fixed-rate amortizing loans. For exact figures, consult your lender.