Refinance Calculator
Should you refinance? Plug in your current loan and the new offer to see your monthly savings, break-even point, and lifetime savings or cost.
What "break-even" actually means
Refinancing isn't free. You'll pay 2-5% of the loan amount in closing costs — typically $4,000-$10,000 on a $250K loan. Break-even is the number of months it takes your monthly savings to fully recoup those closing costs.
If you'll sell or refinance again before break-even, you lose money on the refi. If you'll stay much longer, you win — sometimes by tens of thousands over the life of the loan.
Your current loan: $285,000 balance at 7.5% with 27 years remaining.
A new lender offers 6.5% for 30 years with $5,500 in closing costs (paid at closing, not rolled in).
If you stay 5 more years past the break-even, you save $250 × 60 = $15,000. The catch: you reset the clock to 30 years, so total interest over the life of the loan may actually be higher unless you keep paying extra on the new loan.
When refinancing is worth it
- Rate drops 0.75%+ from your current rate (the old "1% rule" is now too strict)
- You plan to stay 3+ years in the property
- You need to remove PMI after building 20% equity
- You want cash out for renovations, debt consolidation, or another investment
- You want to shorten the term to be debt-free faster (e.g., 30yr → 15yr)
- You want to switch from ARM to fixed before your rate adjusts up
The trap: resetting your amortization clock
Lower monthly payments on a refi often come from resetting the term back to 30 years, not from a dramatically lower rate. That feels great month-to-month but can cost you tens of thousands more in total interest paid over the life of the loan.
Two ways to avoid the trap:
- Refinance to a shorter term (15 or 20 years) if the new monthly is still affordable.
- Refinance to 30 years but keep paying the old payment. The extra each month goes to principal — you'll pay off in roughly the original timeline at the new lower rate.
Cash-out refinance for investors
For real estate investors, refinancing is often less about lowering payments and more about pulling equity out to fund the next deal. This is the "R" in BRRRR.
Investor cash-out refinance terms typically:
- Cap at 70-80% LTV (vs 80-85% for owner-occupied)
- Rate is 0.5-1% higher than purchase money rate
- Require 6-12 months of "seasoning" before refi after purchase
- Require strong rental income documentation or DSCR coverage
Frequently asked questions
Should I roll closing costs into the loan or pay them upfront?
Paying upfront keeps your loan balance lower and saves you interest on those costs over 30 years. Rolling them in keeps cash in your pocket today but you'll pay interest on the closing costs for the life of the loan. If you can comfortably afford to pay them, paying upfront is mathematically better.
How long is the refi process?
Typically 30-45 days from application to closing. Cash-out refis sometimes take longer (45-60 days). You can lock the rate at application — lock periods are usually 30, 45, or 60 days.
What's a "no-cost refinance"?
Be skeptical. The closing costs don't disappear — they're either rolled into the loan balance (so you pay them with interest) or paid for by a higher rate (a "lender credit"). It can still make sense if your break-even on a normal refi is too long, but it's not actually free.
Does refinancing hurt my credit?
A hard pull for the refi will temporarily drop your score 5-10 points. Once the refi closes, your old loan is paid off — which can also briefly drop your score. Both effects fade within 6-12 months as you build payment history on the new loan.
Can I refinance more than once?
Yes, with no legal limit. Practically, most lenders have a "seasoning" requirement (6 months for rate/term refi, often 6-12 months for cash-out) before refinancing again. Each refi costs another round of closing costs, so doing it repeatedly only makes sense if rates have dropped substantially each time.
Rates change daily. Always get a Loan Estimate disclosure within 3 days of application to verify all fees and the true APR. Refinancing extends your loan term unless you specifically choose a shorter one.