Current Loan
New Loan
Typical range: $2,000 – $6,000
Monthly Savings
$2,313/mo → $1,970/mo
Break-Even
12 mo
Break-Even Date
January 1971
Good deal — if you stay
Break-even in 12 months (~1.0 years). Refinancing makes sense if you plan to keep the home past that point.
Break-Even Timeline
Life-of-Loan Savings (after closing costs)
Current vs New Loan Comparison
| Current | New | |
|---|---|---|
| Interest Rate | 7.25% | 6.25% |
| Loan Term | 25 yr | 30 yr |
| Monthly Payment | $2,313 | $1,970 |
| Total Interest | $373,895 | $389,306 |
| Total Cost | $373,895 | $393,306 |
| Closing Costs | — | $4,000 |
Estimates only. Calculations assume fixed-rate loans with no prepayment. Total interest is computed over the full selected term. Closing costs vary by lender, state, and loan type — request a Loan Estimate for accurate figures. Consult a mortgage professional before making refinancing decisions.
Refinancing your mortgage can save tens of thousands of dollars — or cost you money if you move before recouping the closing costs. The break-even point is the single most important number in any refinancing decision: it tells you exactly how many months of lower payments are needed to pay back what you spent on closing costs. A homeowner who refinances from 7.25% to 6.25% on a $320,000 balance with $4,000 in closing costs saves about $195/month and hits break-even in roughly 21 months. But if they sell or refinance again at month 18, they lose about $690 on the deal.
The calculator uses the standard fixed-rate amortization formula to compute monthly payments for both your current loan and the proposed new loan. Monthly savings is the difference between the two payments.
Break-even months = closing costs ÷ monthly savings. If monthly savings are negative (the new loan costs more per month), refinancing never makes financial sense on a pure cash-flow basis.
Total interest is the sum of all interest payments over the full loan term. The comparison shows both total interest and total cost (interest + closing costs) to reveal whether extending the term at a lower rate actually saves money over the life of the loan.
Lifetime savings = (current total interest) minus (new total interest + closing costs). A positive number means refinancing saves money overall; negative means it costs more even if the monthly payment is lower.
The break-even timeline bar runs from today (month 0) to the end of the new loan term. The red section represents the period during which closing costs have not yet been recovered. The green section begins at the break-even month and represents net savings territory.
A homeowner with 25 years left at 7.25% who has been offered 6.25% for a new 30-year loan, weighing the monthly savings against the cost of resetting their term.
A couple planning to sell in 3 years checking whether refinancing from 7.5% to 6.75% with $5,000 in closing costs is worth it given the short timeline.
A borrower doing a cash-out refinance to fund a kitchen renovation, calculating the new monthly payment and break-even after pulling $40,000 equity.
A homeowner on a 30-year loan who has 22 years remaining and is considering a 15-year refinance to pay off the home faster, even though the monthly payment increases.
Scope note: Calculations assume a fixed-rate mortgage with no prepayment. Adjustable-rate mortgages, points-paid to buy down the rate, and no-closing-cost loans (where costs are rolled into the rate) require different analysis. Tax deductibility of mortgage interest is not modeled. Break-even calculation uses nominal dollars — inflation is not accounted for (real dollars would slightly favor longer break-even periods). Always request a Loan Estimate from your lender before making a refinancing decision.
Disclaimer: This calculator is for informational and educational purposes only and does not constitute financial, tax, or legal advice. Results are estimates based on publicly available tax slabs and formulas. Consult a qualified Chartered Accountant, tax professional, or financial advisor for guidance specific to your situation. Built and maintained by the WOWHOW Team with 14+ years of software development experience.
Enter your current loan balance, interest rate, and remaining term
Enter the new interest rate you have been offered and select the new loan term
Add your estimated closing costs (typically $2,000–$6,000) and any cash-out amount
Read the break-even timeline and recommendation to decide if refinancing makes sense
Invoice generators, GST calculators, and accounting spreadsheets built for Indian businesses. Starting at $4.
Browse Finance Templates