Frequently asked questions
How much lower should the new rate be to justify refinancing?
It depends on your balance and how long you plan to stay. With a large balance ($300k+), even a 0.5% drop can save significantly. The real test is the break-even month: if you will stay in the home longer than the break-even period, refinancing makes financial sense.
What is the break-even point?
The break-even point is when your cumulative monthly savings exceed the closing costs you paid. Before break-even, you are still recouping the refi costs. If you sell or refinance again before break-even, you lose money. Under 24 months is excellent; over 5 years is risky.
Should I refinance into a longer term to lower payments?
Extending the term lowers the monthly payment but may increase total interest paid. It makes sense if you need cash flow relief. If your goal is to save overall, a shorter or same-length term with a lower rate is better. The comparison table shows the total cost difference clearly.
What is the difference between the two input modes?
Use 'Know remaining balance' if you can check your current mortgage statement for the balance and remaining months. Use 'Know original loan' if you only remember the original loan amount and term — the calculator derives your current balance from payments already made.
Can I roll closing costs into the new loan?
Yes, most lenders allow this. Your new balance becomes higher, which slightly reduces savings and extends break-even. To model this, add closing costs to the balance. This calculator assumes costs are paid upfront for a cleaner comparison.
Does refinancing reset the amortization clock?
Yes. A new 30-year loan restarts amortization, meaning more early payments go to interest. This is why total interest can increase even with a lower rate if you extend the term. To avoid this, refinance into a term equal to or shorter than your remaining years.