What "break-even" really means
Refinancing isn't free — you pay closing costs (often 2–5% of the loan) to get the new rate. The break-even point is how long it takes for your lower monthly payment to add up to those costs. Before break-even, you're behind. After it, the refinance is pure savings — as long as you still own the home.
The hidden trap: resetting the term
If you refinance a loan you've been paying for 5 years into a fresh 30-year loan, your monthly payment drops, but you've added 5 years of payments back. A lower rate can still mean more total interest over the life of the loan. That's why the calculator shows both your monthly savings and the lifetime interest for each option — so you see the full picture.
When refinancing makes sense
- You'll stay in the home well past the break-even point.
- The rate drop is meaningful (often 0.75%+ on a large balance).
- You're not dramatically extending your timeline, or you're fine with it for the lower payment.
Frequently asked questions
Is my data saved?
No. The calculation runs entirely in your browser. Nothing is stored or transmitted.
What's included in closing costs?
Typically lender fees, appraisal, title, and recording fees. Ask your lender for a full estimate and enter the total.
Can I shorten my term when I refinance?
Yes — refinancing into a shorter term (e.g. 30 → 15 years) usually means a higher monthly payment but far less total interest. Enter the shorter term to compare.
For educational and estimation purposes only; not financial advice. Estimates assume fixed rates and consistent payments and exclude taxes, insurance, and PMI. Consult a qualified professional.