Compare your current mortgage with refinanced terms to see if refinancing could save you money
Current mortgage vs refinanced terms
When cumulative savings exceed closing costs
At 5.50% over 30 years, refinancing would cost you $9,157 more than keeping your current loan after accounting for closing costs. Consider a lower rate, shorter term, or reducing closing costs.
Refinancing replaces your current mortgage with a new one, usually to get a lower rate, a different term, or cash out equity. This calculator compares your existing loan against the new offer, including closing costs, and finds the break-even point — the month when accumulated monthly savings finally exceed what the refinance cost.
A refinance is worthwhile when you'll keep the new loan comfortably past break-even, and when the new term doesn't quietly add years of interest back onto the loan.
Break-even months = Closing costs ÷ Monthly savingsThe old "1% rule" is just a heuristic — what matters is break-even. If closing costs are $6,000 and you save $250/month, you break even in 24 months; staying 5+ years makes it clearly worthwhile. Shorter expected stays need bigger savings.
Typically 2–5% of the loan amount, covering lender fees, appraisal, title work, and recording. Some costs are negotiable, and shopping multiple lenders on the same day makes offers directly comparable.
It replaces your loan, so the term is whatever you choose for the new one. Taking another 30-year term lowers payments but can raise lifetime interest even at a lower rate. Matching the new term to your remaining years preserves your payoff date while capturing the rate savings.
A new loan larger than your current balance, with the difference paid to you in cash from your equity. Rates run slightly higher than standard refinances, and you're converting home equity into debt — sensible for high-value uses like renovations or consolidating much more expensive debt, risky for discretionary spending.
Forget the 1% rule. Break-even math is how you decide whether to refinance — here's how to run it, plus the term-reset trap that eats most refinance savings.