Enter what you still owe, your current rate and remaining term, and the offer you are considering. The calculator shows the new payment, how many months it takes for the saving to cover the closing costs, and whether you come out ahead over the life of the loan.
Refinancing replaces your mortgage with a new one. It pays when the interest you save is larger than the cost of switching. The break-even point is the closing costs divided by the monthly saving — if you expect to sell or move before then, refinancing loses money.
Watch the term. Restarting a 30-year loan when you have 25 years left lowers the payment partly by stretching the debt, so the total gain can be negative even when the monthly saving looks good. Set the new term equal to your remaining years to compare like with like.
Common questions
How much lower should the rate be to refinance?
There is no fixed rule. A drop of around one percentage point often pays, but what decides it is the break-even time compared with how long you will keep the loan.
Can I add the closing costs to the loan?
Often yes. That avoids paying cash now but means you pay interest on the costs. To model it, add the costs to the balance and set closing costs to zero.