How much could refinancing save you?

How it works

Refinancing replaces the outstanding balance with a new loan. This comparison starts today: it ignores interest already paid and compares the remaining payments on your current loan with all payments on the new loan plus cash-paid closing costs.

Both loans use fixed monthly payments: A = P × r / (1 − (1 + r)^−n), where P is the balance, r is the annual interest percentage divided by 1200 and n is the number of months. At zero interest, A = P / n. The method is the constant-rate annuity described in Microsoft’s PMT reference.

Simple fee payback is closing costs divided by the monthly payment saving, rounded up. For example, 1,200 in fees and 100 saved per month gives month 12. This pre-tax version of the Federal Reserve’s break-even worksheet applies only while both loans have payments; no payback is shown beyond that period. With no closing costs, there is nothing to recover.

Lifetime interest saving is the current loan’s remaining interest minus the new loan’s interest. Subtract closing costs for the net lifetime saving. A lower payment can still cost more if the new term is longer, as the CFPB explains. This estimate excludes equity comparisons, tax effects, insurance, changing rates and investment returns; it does not model financed fees or cash-out borrowing.