Refinance Interest Savings Calculator
See how much interest a lower rate saves, your new payment, and how many months it takes to break even on the closing costs.
How it works
Old/new payment = bal·r ÷ (1 − (1+r)^−n) at each rate, same n · Interest saved = old interest − new interest · Break-even months = closing costs ÷ monthly saving
Refinancing swaps your rate for a lower one over the same remaining term, cutting both the payment and the interest paid. But closing costs are paid up front, so the real question is the break-even point — how many months of savings it takes to recover those costs. If you plan to stay past break-even, the refinance pays off; if you might move sooner, it may not.
Worked example
On a $300,000 balance at 7% with 25 years left, dropping to 5.75% cuts the payment from about $2,120 to $1,888 — a $232 monthly saving. With $4,000 in closing costs you break even in roughly 18 months, and over the full term you save around $70,000 in interest.
Frequently asked questions
What is the break-even point?
It is the number of months of payment savings needed to recover the closing costs: costs ÷ monthly saving. Refinancing makes sense if you expect to keep the loan well past that point.
Does refinancing to a lower rate always save money?
Only if you stay long enough to clear the closing costs, and if you do not stretch the term back out. Restarting a paid-down loan at 30 years can raise total interest even at a lower rate — keep the remaining term the same to capture the full saving.
Are closing costs worth rolling into the loan?
You can, but financing the costs means paying interest on them and slightly raises the balance and payment. Paying them up front gives a cleaner break-even; compare both ways for your situation.
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Educational estimate only — not financial, tax or lending advice. Confirm exact figures with your lender.