Is Refinancing Actually Worth It?
See the real numbers on mortgage refinancing. Monthly savings vs. closing costs — the math lenders don't emphasize.
Mortgage companies push refinancing hard because they make money on closing costs. But is it actually good for you? This calculator shows the full picture. Yes, your monthly payment might drop by $200. But if closing costs are $8,000, you need to stay 40 months just to break even. And if you extend from 20 years remaining to a new 30-year term, you might pay far more in total interest despite the lower rate. See the monthly savings AND the lifetime cost. Sometimes refinancing is brilliant. Sometimes it costs you money. Know which one before you sign.
Calculator
Common use cases
- Seeing past the monthly payment sales pitch
- Understanding break-even reality
- Comparing total cost, not just monthly savings
- Making informed refinancing decisions
How to use
- Enter current loan balance
- Input current and new interest rates
- Set remaining years and new term
- Add closing costs
- View savings and break-even
FAQ
When does refinancing make sense?
Generally when rates are 0.5-1% lower and you'll stay long enough to pass break-even. Consider total cost, not just payment.
What are typical closing costs?
Usually 2-5% of loan amount. Includes appraisal, title, origination fees, and prepaid items.
Should I extend my term?
Extending lowers payments but increases total interest. Consider your goals: cash flow vs. total cost.
Why do lenders push refinancing?
They earn fees on every new loan. The advice might be good for you too, but always check the break-even math.
This calculator provides illustrative estimates for planning purposes only and does not constitute financial, tax, or legal advice.