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  5. Refinance Calculator: Loan Benefit, Savings & Break-Even
Refinance Desk

Calculate the True Benefit of Refinancing Your Debt

Refinancing can lower your monthly payment or save you thousands in interest, but it is not always free. You must compare upfront closing costs against your monthly savings to find the true break-even point. Refer to the CFPB Refinancing Guide to plan your approach.

Compare Lifetime Interest

Ensure the new interest rate is low enough to offset any closing costs and lower the total interest paid.

Calculate the Break-Even Point

Determine how many months it will take for your monthly payment savings to recover the upfront refinancing fees.

Check the Term Extension

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Extending your loan term can lower your monthly payment but can increase the total interest paid over the life of the loan. Review IRS Publication 936 regarding tax deductions.

A lower interest rate is only half the battle. Be sure the net lifetime savings exceed the cost of refinancing.

Frequently Asked Questions

  • Refinancing means replacing your current loan (such as a mortgage or auto loan) with a new loan under different terms, typically with a lower interest rate or an adjusted repayment period. Refer to the CFPB Refinancing Guide for more details.
  • Refinancing makes sense if interest rates have dropped significantly since you took out the original loan, if your credit score has improved enough to qualify for a better rate, or if you need to switch from an adjustable-rate to a fixed-rate loan for predictability.
  • Closing costs are fees charged by lenders and third parties to process the new loan. They can include application fees, origination fees, appraisal fees, title search fees, and legal fees. Under IRS Publication 936, points paid for refinancing are typically deducted over the life of the loan.
  • The break-even period is the number of months it takes for your monthly payment savings to recoup the upfront refinancing closing costs. It is calculated by dividing the total closing costs by your monthly payment savings.
  • It can. If you refinance a remaining 20-year mortgage into a new 30-year term, you reset the clock. While this lowers your monthly payment, it can increase the total interest you pay over the life of the loan. Always check the net lifetime savings.
Home
Debt Crusader

Refinance Calculator

Loan Benefit, Savings & Break-Even

Inputs

Current Loan Details

$
%
years

Term Unit

New Loan Details

%
years

Term Unit

Closing Costs & Options

$

Roll Closing Costs Into Loan?

Results

Monthly Payment Savings

$421.30 / month

Net Lifetime Savings: $47,389 · Break-Even Period: 8 months

Monthly Payment Comparison

$1,688.02
$1,266.71
Current Monthly Payment
New Monthly Payment

Total Interest & Cost Comparison

$256,405
$206,017
$3,000
Remaining Current Interest
New Loan Interest
Refinancing Closing Costs
Current Monthly Payment
$1,688.02
New Monthly Payment
$1,266.71
Monthly Payment Savings
$+421.30
Remaining Current Interest
$256,405.37
New Loan Interest
$206,016.78
Interest Savings
$+50,388.59
Refinancing Closing Costs
$3,000
Net Lifetime Savings
$+47,388.59
Break-Even Period
8 months