Compares current and new loan terms to evaluate refinancing benefits.
A refinancing break-even calculator tells you how many months it takes for the monthly savings from a lower rate to outweigh the closing costs of the new loan.
Monthly saving = Old payment − New payment Break-even months = Closing costs / Monthly saving Total saving over remaining term = Monthly saving × Remaining months − Closing costs
Old rate 7%, new rate 5.5%, balance $150,000, 20 years remaining. Old payment ≈ $1,163; new ≈ $1,031. Monthly saving = $132. Closing costs $3,500. Break-even = 3,500 / 132 ≈ 26.5 months.
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