How the refinance calculator works
The calculator compares principal-and-interest payments only; taxes and insurance usually stay the same after a refinance. The break-even point is how many months of savings it takes to recover the closing costs.
Monthly savings = Current payment − New payment
Break-even months = Closing costs ÷ Monthly savings
Lifetime change = (New payments + upfront costs) − Remaining current payments
Freddie Mac estimates refinance closing costs at about 3% to 6% of the loan principal. If you expect to sell or refinance again before the break-even month, the refinance probably loses money. Restarting a 30-year term lowers the payment but stretches the debt out, which is why the lifetime figure can be worse than the monthly savings suggest.
Worked example
A $300,000 balance at 7% with 330 months left has a payment of $2,050.85. Refinancing into a new 30-year loan at 6% drops it to $1,798.65, saving $252.20 a month. With $6,000 of closing costs paid upfront, break-even is about 24 months. Choosing a term that matches the 330 months left saves $192.48 a month, takes about 32 months to break even, and saves about $57,500 over the life of the loan versus about $23,300 with the 30-year term.
Related guide
Frequently asked questions
How do I calculate my refinance break-even point?
Divide total closing costs by the monthly savings. $6,000 of costs and $250 of monthly savings break even in 24 months.
How much does it cost to refinance?
Freddie Mac estimates 3% to 6% of the loan principal, covering origination, appraisal, title, recording and other fees. Your Loan Estimate lists the exact amounts.
Is it worth refinancing for 1%?
It depends on your closing costs and how long you will keep the loan. A one-point drop on a large balance often breaks even in two to three years; on a small balance or a short stay it may never pay off.
Does rolling closing costs into the loan make sense?
It avoids paying cash upfront, but you borrow more and pay interest on the costs for the life of the loan.
Why can a lower payment still cost more?
A new 30-year loan restarts the clock. If you had 25 years left, you add five years of payments, which can outweigh the lower rate.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.