FinCompute

Loan Refinance Calculator

Evaluate if refinancing your mortgage or loan will save you money. Compare monthly payments, lifetime interest, and calculate your exact break-even timeline.

Last updated: July 2026

Current Loan

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years
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$

New Loan Offer

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years

Break-Even Point

62.4 months

Monthly Payment Savings

$80.12

Net Lifetime Savings

$23,836.00

Payment Comparison

Current Loan P&I$2,082.72
New Refinanced P&I$1,647.33
Formula Breakdown

1. Monthly Savings

Savings = CurrentPMT - NewPMT

2. Break-Even Period

Break-Even Months = ClosingCosts / MonthlySavings

3. Net Lifetime Savings

Compares the remaining payments of the old loan against the new loan payments plus closing costs.

Net Savings = (CurrentPMT × RemainingMonths) - (NewPMT × NewMonths + ClosingCosts)

How Loan Refinancing Works

Refinancing involves replacing an existing loan with a new loan that offers more favorable terms, such as a lower interest rate, a different repayment term, or lower monthly payments.

Evaluating the Financial Advantage

A successful refinance lowers your overall cost of borrowing. However, closing costs (application fees, origination charges, appraisals, and legal fees) typically range between 2% and 6% of the loan value, meaning the savings must outweigh these upfront expenses.

Refinance Break-Even Point

Break-Even (Months) = Total Closing Costs / Monthly Payment Savings

If closing costs total $3,600 and your new mortgage payment is $180 lower per month, your break-even point is exactly 20 months ($3,600 / $180). You must stay in the home longer than 20 months to achieve real net savings.

Best Practices Before Refinancing

  • Check Prepayment PenaltiesReview your current loan agreement to confirm your current lender does not impose hefty penalties for paying off the loan early.
  • Shop Multiple LendersCompare Loan Estimates from at least three different lenders to evaluate both interest rates and associated origination fees.
  • Watch the Loan TermResetting a mortgage back to a full 30-year term may lower your monthly payment but can increase the total lifetime interest you pay.

Frequently Asked Questions

When should I refinance my loan?

It generally makes sense to refinance if you can secure a lower interest rate, reduce your monthly payment, or shorten your term, provided your total interest savings exceed the closing costs.

What closing costs are associated with refinancing?

Refinancing costs typically include application fees, origination fees, appraisal costs, title search and insurance, credit report fees, and recording fees, ranging from 2% to 6% of the loan amount.

How do I calculate my refinance break-even point?

Divide your total refinance closing costs by your monthly payment savings. If closing costs are $3,000 and you save $150 per month, your break-even point is 20 months ($3,000 / $150).

What is a 'no-closing-cost' refinance?

A no-closing-cost refinance means the lender either rolls the closing fees into your new total loan balance or charges a slightly higher interest rate to cover them.

Does refinancing lower my monthly payment or total interest?

It depends on the term. Refinancing to a lower rate with the same or shorter term saves on both. Resetting your term back to 30 years lowers the monthly payment but can increase total lifetime interest.

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