Example
You owe $300,000 at 7.5% with 28 years left, a payment of about $2,139 (principal and interest). Refinancing into a 30-year loan at 6.25% with $6,000 in closing costs drops the payment to about $1,847, saving around $291 a month. You break even after about 21 months. Over the full terms, you would still pay about $47,600 less, even though the new loan runs two years longer.
Questions to ask before refinancing
- How long will I stay? If you might move before the break-even point, refinancing probably loses money.
- Am I resetting the clock? A shorter new term (like 20 or 15 years) can save much more interest, though the payment is higher.
- What are all the costs? Compare Loan Estimates, including points and lender credits.
- Is my credit in good shape? The best rates go to borrowers with strong credit and enough home equity.
Types of refinance
A rate-and-term refinance changes the rate or length. A cash-out refinance borrows more than you owe and gives you the difference, often at a slightly higher rate. To tap equity without replacing your mortgage, compare a HELOC.
Last reviewed October 2026.
Frequently asked questions
When does refinancing make sense?
Refinancing usually makes sense when the monthly savings recover your closing costs well before you expect to sell or refinance again. The break-even point in this calculator tells you how many months that takes.
What is the break-even point?
It is the closing costs divided by the monthly savings. If refinancing costs $6,000 and saves $290 a month, you break even in about 21 months. After that, the savings are yours.
Can a lower payment still cost more overall?
Yes. If you restart a 30-year loan when you only had 20 or 25 years left, you add years of payments. The "lifetime cost" figure compares the total you will pay on each loan, including closing costs, so you can see the full picture.
Should I roll closing costs into the loan?
Rolling them in avoids paying cash up front, but you borrow more and pay interest on the costs. Tick the box to see the effect. Some lenders offer "no-cost" refinances with a slightly higher rate instead.
How much are refinance closing costs?
They commonly run about 2% to 6% of the loan amount and cover the appraisal, title insurance, origination and recording fees. Ask for a Loan Estimate from several lenders to compare.