Calculate whether refinancing saves you money. See monthly savings, breakeven timeline, and total loan savings across 15-year and 30-year refinance scenarios side by side.
Refinancing your mortgage can lower your monthly payment, reduce your interest rate, or shorten your loan term — but it comes with closing costs typically ranging from 2% to 5% of the loan amount. The golden rule of refinancing is simple: you need to stay in the home long enough for your monthly savings to exceed those upfront costs. Most financial professionals recommend considering refinancing only if you can lower your rate by at least 0.5–1% and plan to keep the home for 2–3 more years. A rate reduction of 1% on a $300,000 loan saves roughly $190/month — which means $6,000 in closing costs are recouped in about 31 months. Use this calculator to find your exact breakeven point before you pay for an appraisal or application.
Key Insight
At 6% on a $300,000 loan, you would save up to $192/month compared to your current payment of $1,991. With a 30-year refinance, you would break even in 32 months.
$192
Max Monthly Savings
$6,000
Closing Costs
30 Years
Recommended Term
Refinance if: You plan to stay in your home past the breakeven period, your credit score has improved since your original loan, rates have dropped by at least 0.5%–1%, or you want to switch from an adjustable-rate to a fixed-rate mortgage.
Do not refinance if: You plan to move within 1–2 years, your home has declined in value leaving you underwater, or your new payment would not be meaningfully lower after accounting for closing costs.
Pro tip: Compare offers from at least 3–5 lenders. Even a 0.25% difference in rate on a $300,000 loan saves approximately $15,000 over 30 years. Use our mortgage payment calculator to compare exact scenarios.
When should I refinance my mortgage?
Most financial experts recommend refinancing when you can get a rate at least 0.5%–1% lower than your current rate. However, the math also depends on how long you plan to stay in the home — you need to stay past the breakeven point (when monthly savings exceed closing costs) for refinancing to make sense. A good rule: if you will stay in the home for at least 2–3 more years and can lower your rate by 0.75%+, refinancing is worth considering.
Is a 0.5% rate drop worth refinancing?
A 0.5% rate drop can be worth it, but it depends on your loan size and closing costs. On a $300,000 loan, a 0.5% rate reduction saves approximately $90/month, which is $1,080/year. If closing costs are $6,000, you would break even in about 5.5 years. If you plan to stay longer than that, a 0.5% drop is worth it. Smaller loans or shorter planned stays may not benefit.
Should I roll closing costs into the new loan?
Rolling closing costs into the loan increases your principal but may still make sense if the monthly payment decrease is significant enough. For example, adding $6,000 to a $300,000 loan at 6.5% increases your payment by roughly $38/month — if your payment drops by $200/month, you still net $162/month in savings. However, this means it takes longer to truly break even since your loan balance is higher.
What is the best term to refinance into?
The best term depends on your goals. Refinancing to a shorter term (15 years) maximizes total interest savings but increases monthly payments substantially. Refinancing to a 30-year term lowers payments the most but costs more in total interest over time. A 20-year term is a middle ground — better than 30-year in total cost, easier to manage than 15-year payments.
Does refinancing affect my equity?
Refinancing itself does not directly affect your equity — equity is based on how much principal you have paid down versus your home value. However, if you do a cash-out refinance (borrowing more than you owe), you reduce your equity. A rate-and-term refinance (just changing the rate and/or term) does not change your equity position, though it changes how quickly you will build it going forward.
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