Should I Refinance Calculator
Get a clear answer on refinancing: the new payment, your monthly saving, the break-even point, and whether it’s worth it for how long you’ll stay.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Current balance
- $250,000
- Current rate
- 7.25%
- Years left on current loan
- 27
- New rate
- 6%
- New term (years)
- 30
- Refinance closing costs
- $4,500
- Years you’ll keep the home
- 8
break-even in 17 months
- Current payment$1,760.48
- New payment$1,498.88
- Break-even17 mo
How the yes — refinancing pays off changes with current balance
Holding the other inputs at the example above, here is how the result moves as current balance changes.
| Current balance | Yes — refinancing pays off | Current payment |
|---|---|---|
| $125,000 | $130.80/mo saved | $880.24 |
| $200,000 | $209.29/mo saved | $1,408.39 |
| $250,000 | $261.61/mo saved | $1,760.48 |
| $375,000 | $392.41/mo saved | $2,640.73 |
| $500,000 | $523.22/mo saved | $3,520.97 |
The math behind it
The calculator amortizes your current balance at your existing rate over the years left, and again at the new rate over the new term, to compare payments. The difference is your monthly saving, and dividing closing costs by that saving gives the break-even in months. The verdict compares that break-even against how long you plan to keep the home: if you recoup the costs comfortably within that window, it says refinancing pays off; if not, or if the payment rises, it advises caution.
Assumptions & limits
- The recommendation hinges on whether the break-even falls within the number of years you plan to stay.
- Both payments are principal and interest on the same balance; taxes, insurance, and PMI are not modeled.
- The break-even is closing costs divided by the monthly saving, ignoring the time value of money.
- A longer new term can lower the payment while raising lifetime interest — the tool flags this even when the monthly answer is favorable.
- A single fixed interest rate is assumed for each loan.
Source: Freddie Mac PMMS via FRED. Annual averages; latest weekly reading shown.
Common questions
How long do I need to stay for a refinance to be worth it?
At least until the break-even month, when your accumulated monthly savings equal the closing costs. The calculator compares that break-even to the years you enter for keeping the home and gives a clear verdict. Planning to move before break-even usually means the refinance does not pay off.
What if the new payment is higher than my current one?
Then refinancing does not help your cash flow, and the calculator says so. That can still make sense if you are deliberately shortening the term to save interest and build equity faster — but it is not a payment-reducing refinance, and the tool distinguishes the two cases.
Is a rule like 'refinance if the rate drops 1%' reliable?
It is a rough shortcut, not a rule. Whether a refinance pays off depends on your balance, closing costs, remaining term, and how long you will stay — not the rate drop alone. This calculator uses your actual numbers to give a break-even and verdict instead of a blanket threshold.