Thinking about refinancing? Enter your current loan and a new rate to see your new monthly payment, the month you break even on closing costs, and how lifetime interest compares — with a clear verdict.
7 min readUpdated: 29 Jul 2026US
Refinancing a mortgage replaces your current loan with a new one, ideally at a lower rate. It only pays off once your monthly savings outweigh the closing costs, which average 2–5% of the loan amount in the US. This calculator shows your new payment, break-even month and lifetime interest saved so you can decide whether to refinance.
Refinancing replaces your current mortgage with a new one — usually to get a lower rate. It only pays off if the monthly payment savings recover your closing costs before you sell the home or refinance again.
This calculator settles it by finding your break-even month: your total closing costs divided by the monthly payment reduction. If a refinance saves $200 a month and costs $6,400 to close, you break even in 32 months. Stay in the home past that point and the refinance has paid for itself; move or refinance again before it and you paid fees you never recovered.
Watch the term, not just the rate
A lower rate does not automatically mean less interest. Resetting a loan you are several years into back to a fresh 30-year term spreads the balance over more years, so your lifetime interest can rise even as your rate falls. That is why this tool shows total interest for both loans side by side — a lower monthly payment and a higher lifetime cost often travel together. If your goal is to pay less interest overall, compare a shorter new term, or keep making your old payment amount on the new lower-rate loan.
Closing costs and points
Closing costs typically run 2% to 6% of the loan amount and cover the lender's origination fee, appraisal, title insurance and recording fees. Discount points are optional prepaid interest — each point is 1% of the loan for roughly a 0.25% lower rate. You can roll costs into the loan to avoid paying out of pocket, but you then pay interest on them for the full term, which pushes your true break-even later. Your mortgage is secured debt, so it sits outside a payoff plan — for credit cards and other unsecured balances, see our debt snowball guide and the rest of our debt payoff guides.
Frequently Asked Questions
The break-even month is your total closing costs divided by the monthly payment reduction. If refinancing lowers your payment by $200 a month and costs $6,000 to close, you break even in 30 months. Refinancing usually pays off only if you keep the home past that point.
Closing costs on a refinance commonly run 2% to 6% of the loan amount, covering the lender's origination fee, appraisal, title insurance and recording fees. You can often roll them into the new loan, but you then pay interest on them for the life of the loan.
It can. Resetting a mortgage you are 8 years into back to a fresh 30-year term lowers the monthly payment but stretches interest over more years, so lifetime interest can rise even though the rate fell. This calculator shows lifetime interest for both loans so you can see the trade-off.
Discount points are prepaid interest — each point is 1% of the loan amount and typically lowers your rate by about 0.25%. Add them to your closing costs. Paying points makes sense only if you keep the loan long enough for the monthly saving to exceed the upfront cost.
Disclaimer: This calculator is indicative only and based on standard amortization of principal and interest. It excludes taxes, insurance, PMI and lender-specific fees, and does not constitute financial or mortgage advice. Your actual rate, closing costs and eligibility depend on your lender and circumstances. Always review the official Loan Estimate and speak to a licensed loan officer before deciding to refinance.
How this calculator works›
The method
It compares your current mortgage with a proposed refinance. It amortizes both loans month by month — interest on the balance plus the monthly payment — using the balance, rate and remaining term you enter for the current loan, and the new rate, term and closing costs for the refinance. It returns your new monthly payment, the monthly saving, the break-even month where cumulative savings cover the closing costs, and the difference in total lifetime interest.
Assumptions & limitations
It uses the figures you enter; your actual rate and closing costs come from a lender Loan Estimate.
It assumes fixed rates for both loans and does not predict future rate changes.
It does not model points, escrow, PMI or cash-out unless reflected in the numbers you enter.
Written and reviewed by Peter Barclay,
a UK Chartered Mechanical Engineer — who builds and maintains these tools, pairing
engineering-mathematics training with a focus on the mechanics of debt repayment. The calculators use standard amortization formulas and fixed
repayment orders. Read our methodology
or more about the author.
DebtSnowball is not a financial adviser and is not authorised or regulated by
the CFPB.
These tools are for education and information only, not financial advice.
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