Decide whether refinancing is worth it by comparing payments and finding your break-even month.
Remaining principal on the existing loan.
Annual rate on the current loan.
Remaining term in years on the current loan.
Rate offered on the refinance.
New term in years — may be shorter or longer than remaining term.
Fees to refinance (origination, appraisal, title, etc.).
Current Payment
$1,199.10
New Payment
$1,073.64
Monthly payment under the new loan at the new rate and term.
Monthly Savings
$125.46
Current payment minus new payment — positive means cheaper each month.
Break-Even Month
40
Closing costs divided by monthly saving — months to recoup the upfront cost.
Total Interest Saved
$45,164.81
Total interest not paid versus staying in the current loan.
Net Savings After Costs
$40,164.81
Interest Paid — Keep Current
$231,676.38
Interest Paid — Refinance
$186,511.57
What this means
Refinancing swaps one amortization schedule for another. Lower payment alone is not a win — break-even and total interest determine whether it pays.
Refinancing trades closing costs for a lower rate. The key question is how many months it takes for lower payments to repay those costs — the break-even month.
Formula
break-even month = closing costs ÷ monthly payment savings
Worked examples
FAQ
What if the break-even month exceeds the rate lock period?
If you expect to move or refinance again before the break-even month, the upfront costs likely are not worth it.
Should I keep the same loan term?
Extending the term lowers the payment but adds interest; shortening it raises the payment but saves more. Compare both here.
Important assumptions