Refinancing Savings Calculator

When Refinancing Makes Sense

Refinancing can save you thousands, but only if you get a meaningfully lower interest rate. Generally, you need at least a 1-2% rate reduction to justify the costs and effort. The longer you plan to keep the loan, the more refinancing makes sense.

Breakeven Analysis

Refinancing costs money upfront (origination fees, appraisal, etc.). Your monthly savings need to exceed these fees before you start coming out ahead. If you're refinancing a 36-month loan, you need to stay in the loan long enough to recoup your fees in monthly savings.

Rate Environment Matters

If rates have dropped significantly since you took out your original loan, refinancing is usually worth it. If rates have only dropped slightly (less than 1%), the fees may not be worth it. Check current rates and compare the math using this calculator.

When NOT to Refinance

• You only have a few months left on your loan
• The new rate is less than 1% lower (unless you have low fees)
• You plan to pay off the loan very soon
• Your credit score is significantly lower than when you got the original loan

Types of Refinancing

Rate-and-Term Refinance

You refinance to a lower rate and/or shorter term, but borrow the same amount. This is the simplest type and typically has the lowest costs. Best when rates have dropped and you want to save on interest.

Cash-Out Refinance

You refinance for more than you owe and take the difference in cash. Useful for consolidating debt or funding improvements, but you'll borrow more and pay more total interest. Only pursue if the math clearly works.

Personal Loan Refinancing

If you have high-interest debt (credit cards, personal loans), you can refinance into a new personal loan at a better rate. This is common for debt consolidation. Compare personal loan rates to see current options.