Loan refinance savings calculator

It estimates both monthly payments, monthly savings, remaining interest, closing-cost impact, and lifetime savings. You can also choose whether closing costs are paid upfront or added to the new principal, making the comparison useful for mortgages, auto loans, and other fixed-rate installment loans.

Build an accurate current-loan baseline

Begin with the principal balance that remains today, not the amount you originally borrowed. Enter the current annual percentage interest rate and the exact number of monthly payments left. Those three values define the cost of keeping the existing loan: its scheduled monthly principal-and-interest payment and the interest still due if every payment is made as planned. This calculator assumes a standard fully amortizing, fixed-rate loan with one payment each month. It does not reconstruct an adjustable-rate schedule, interest-only period, balloon payment, penalty, escrow, insurance, or tax charge. If your statement combines principal and interest with property tax or insurance, do not enter the combined statement payment; the calculation derives principal and interest directly from the balance, rate, and remaining term. Checking these values against a recent lender statement matters because even a modest balance or term difference can change the comparison. The baseline is deliberately forward-looking: interest already paid is a sunk cost and does not affect whether refinancing today saves money from this point onward.

Describe the refinance offer and its closing costs

Enter the proposed annual interest rate, the new term in months, and every closing cost required to obtain the refinance. Typical costs may include origination, appraisal, title, recording, legal, or lender fees, depending on the loan and jurisdiction. Use the total that actually applies to the offer rather than a generic percentage. Select whether those costs will be financed. When costs are paid upfront, the new principal equals the current balance and closing costs are added separately to the refinance's lifetime cost. When costs are financed, they increase the new principal, which raises both the payment and the interest charged, while the full closing-cost amount still counts against savings. This treatment prevents financed fees from disappearing from the comparison. The calculator does not include cash taken out beyond closing costs; if an offer includes additional borrowing, it is not an apples-to-apples savings comparison. It also assumes the quoted rate remains fixed and that no points or credits are omitted from the closing-cost figure. Review the lender's official disclosure before relying on an estimate.

Interpret monthly savings, break-even time, and lifetime savings

Monthly savings is the current calculated payment minus the new calculated payment. A positive result means the required monthly principal-and-interest payment falls; a negative result means it rises. Payment relief and overall savings are different questions. Extending the term can reduce the monthly payment while increasing the total interest paid over the life of the debt. The total interest difference compares remaining interest on the current loan with interest on the proposed loan before closing costs. Net lifetime savings then subtracts closing costs, so a positive value indicates that the refinance is cheaper over both complete schedules. The break-even estimate divides closing costs by positive monthly savings and rounds up to a whole month. Treat it as a simple recovery indicator, not a complete investment return: financed fees, unequal terms, tax effects, opportunity cost, prepayments, and a future sale can alter the real outcome. If you expect to repay or sell before break-even, refinancing may not recover its transaction cost. Compare several offers, test realistic holding periods, and use the lender's amortization schedule for a final decision.