Refinance Calculator

Break-even is the first question, not the last

Divide closing costs by the monthly saving and you get the month at which refinancing starts being worth it. If you might move or refinance again before then, it is not worth it. That part is simple; the part lenders rarely foreground is what happens after.

Resetting the clock is the hidden cost

Refinancing a loan you are four years into back to a fresh 30-year term adds four years of payments. The monthly figure falls partly because the rate dropped and partly because the balance is now spread over longer — and the second part is not a saving at all. The “matched term” line above shows what the payment would be at the new rate over the years you had left, which isolates the genuine rate benefit.

Cash-out refinancing is a separate decision

Taking cash out converts home equity into a 30-year debt at mortgage rates. That can be far cheaper than credit card debt and far more expensive than paying cash, and it puts your home behind the borrowing. The break-even arithmetic above still applies, but the comparison should be against the alternative use of the money, not against doing nothing.

The reset clock is the cost that does not appear in the break-even

Refinancing a loan that is eight years into a 30-year term into a fresh 30-year term lowers the payment partly through the lower rate and partly by stretching the remaining balance over 38 total years of borrowing. The monthly saving is real, and so is the additional interest paid for those extra years. Comparing like with like means either refinancing into a term that ends when the original would have, or comparing total remaining interest rather than the monthly figure alone.

A no-closing-cost refinance does not remove the cost; it moves it. The lender either adds it to the balance or prices it into a slightly higher rate, which makes the break-even calculation above trivially fast but the lifetime cost higher if the loan is held for long. That structure genuinely suits a short expected tenure. Cash-out refinancing is a different transaction again: it converts unsecured or future spending into debt secured against the home, and should be evaluated on that basis rather than on the payment.

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