Compare your current loan's remaining balance, rate, and term against a new refinance offer — see the monthly savings, interest difference, and how many months it takes to break even on closing costs.
This page’s own defaults show why refinancing needs two separate questions asked, not one. A $280,000 balance at 6.5% with 25 years remaining, refinanced into a new 30-year loan at 5.5%, with $4,000 in closing costs:
The break-even calculation, taken alone, says this refinance is a clear win — the fees pay for themselves in barely over a year. The total-interest column says the opposite: this loan costs more over its life. Both are correct. The break-even math only asks when the monthly savings offset the upfront fee; it has no opinion about the length of the loan. Resetting to a fresh 30-year term after 25 years is what does the damage — you gain five years of low payments and pay for them with five extra years of interest on the back end, even at a meaningfully lower rate.
Refinance into a term that matches what is actually left, not the lender's default term. Choosing a new 25-year loan here instead of 30, at the same 5.5%, changes the trade entirely: the payment comes to $1,719 rather than $1,590, so the monthly saving shrinks to $171 instead of $301 — but total interest falls to $235,833, which is $51,341 less than the current loan's $287,174, not $5,157 more. A smaller monthly saving paired with a genuine six-figure reduction in lifetime interest, instead of a larger monthly saving that quietly costs more overall. Whenever a refinance offer defaults to a fresh 30-year term, ask what the shorter option costs before assuming the bigger headline saving is the better deal.
Three things can each independently make a lower-rate refinance a worse deal in total: resetting the amortization clock (as above), closing costs large enough that you move before break-even, and a rate drop too small to justify the fees at all. A refinance is only unambiguously good when the new rate is meaningfully lower, the new term does not stretch materially past your original one, and you are confident you will stay in the loan well past the break-even point. Miss any one of the three and "lower rate" stops being the same thing as "better deal."
Break-even months = closing costs ÷ monthly savings. If refinancing saves you $200/month and costs $4,000 in closing costs, you break even in 20 months — refinancing is worth it financially if you plan to stay in the home (or keep the loan) longer than that.
Not necessarily — resetting to a new 30-year term after you've already paid down several years of your current loan can lower your monthly payment while increasing total interest paid, since you restart the amortization clock at year zero. Always compare total remaining interest, not just the monthly payment, using the figures above.
Typically 2–5% of the loan amount, covering appraisal, origination fees, title insurance, and other lender and third-party charges. Get an actual Loan Estimate from your lender rather than assuming a flat percentage — costs vary meaningfully by lender and region.
Worked example: a $280,000 balance at 6.5% with 25 years remaining costs about $1,891/month. Refinancing into a new 30-year loan at 5.5% costs about $1,590/month — a $301/month saving. Against $4,000 in closing costs, that's a break-even of about 14 months.
One refinance is not reversible in the way the others are: refinancing a federal student loan with a private lender converts it permanently to private terms, giving up income-driven repayment, Public Service Loan Forgiveness and federal deferment rights for good. A lower rate can still be worth it, but price what you would be surrendering first — the income-driven repayment calculator shows what the federal plans would have cost over the same period.
A stated rate alone does not capture what a refinance actually costs upfront — the APR Calculator folds closing costs and fees into a single comparable rate, including how that true cost changes if the new loan is not held for its full term either.
Seeing the full row-by-row breakdown behind either loan's numbers — not just the summary totals — is what the Amortization Schedule Calculator lays out, month by month or year by year.
Shopping for a new home loan instead? Use the Mortgage Calculator. Wondering if it's worth waiting for lower rates? Read where mortgage rates stand in 2026. If you are weighing refinancing against simply overpaying the loan you already have, run both: the Mortgage Payoff Calculator shows what extra payments alone achieve, and the Amortization Schedule Calculator shows exactly where each payment currently goes. Veterans have a streamlined refinance option of their own with lighter documentation and a reduced funding fee; price it on the VA mortgage calculator.