Current loan vs the new offer
Remaining balance - old loan vs refi
Lifetime comparison counts everything: remaining payments on the old loan ($588,347) versus the full new loan plus closing costs ($583,172).
Your refinance decision brief
Your refinance math
Current loan: $280,000 left at 6.90% with 25 years to go → $1,961.16/month and $308,347 of interest still ahead of you.
New loan: same $280,000 at 5.60% over 30 years → $1,607.42/month and $298,672 of lifetime interest, plus $4,500 in closing costs.
Monthly cash flow: you free up $353.73 every month
• Break-even on the $4,500 closing costs: 1 yr 1 mo - stay in the home at least that long or the refi loses money.
Lifetime verdict: the refi wins by $5,175 all-in (closing costs counted).
The clock-reset trap: you have 25 years left but the new loan runs 30. Those extra 5 years of payments are where lifetime savings go to die. Countermove: take the new rate but keep paying your OLD payment amount ($1,961.16) - the surplus attacks principal and can beat both original schedules.
Before you lock a rate
• Get Loan Estimates from at least 3 lenders within a 14–45 day window - the credit inquiries count as one event, and lenders negotiate against each other's sheets.
• Ask about 'no-closing-cost' options: a slightly higher rate with zero cash due can win if you might move before break-even.
• Confirm there's no prepayment penalty on the new loan so the keep-paying-the-old-payment trick stays on the table.
How the refinance calculator works
The calculator amortizes your current mortgage over its remaining term and the refinance offer over its full term, then compares them three ways: monthly payment, break-even point, and lifetime cost. Break-even is your closing costs divided by the monthly savings - the number of months you must keep the home before the refi stops being a loss. If you might sell before break-even, the refi loses money no matter how good the rate looks.
The trap this tool is built to expose is the clock reset. If you have 25 years left and refinance into a fresh 30-year loan, you've added five years of payments - and a lower monthly payment can quietly hide a higher lifetime cost. The honest comparison counts everything you'd still pay on the old loan versus the new loan's full cost plus closing costs. The counter-move, if you refinance for the rate but not the term: keep paying your old payment amount, and the surplus attacks principal.
Rate-and-term refinances aren't the only kind worth modeling here. A cash-out refinance raises the loan balance to release equity as cash, which resets break-even math in your favor of the lender since you're financing more, not less - run that larger balance through the same comparison rather than assuming the same rate improvement pays off equally well. The calculator's break-even and lifetime-cost numbers work identically regardless of why you're refinancing.
Frequently asked questions
- When is refinancing worth it?
- As a rule of thumb, when the new rate is at least 0.75-1% lower, you'll stay past the break-even point, and the lifetime comparison is positive. All three conditions matter - a great rate with high closing costs and a short stay can still lose money.
- What are typical refinance closing costs?
- Usually 2-5% of the loan amount, covering origination, appraisal, and title fees. 'No-closing-cost' refis roll them into a slightly higher rate - sometimes the better deal if you may move before break-even.
- Should I refinance into a shorter term?
- If you can afford the higher payment, a 15- or 20-year refi at a lower rate is often the biggest lifetime win - you cut both the rate and the years. The calculator shows the exact trade in monthly cost versus lifetime savings.
- Does refinancing restart my mortgage from zero?
- It replaces your loan with a new one at the term you choose. Picking a term equal to your remaining years avoids the clock reset entirely; picking a longer one lowers the payment but adds years of interest - which the lifetime verdict on this page makes visible.
- Do I need a certain credit score to refinance?
- Conventional refinances typically want 620+, with the best rates reserved for 740+. Government-backed programs (FHA, VA) are often more forgiving. Since your rate improvement is what drives the entire break-even calculation, it's worth checking your score before assuming a refinance will help.