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Refinance calculator
A lower rate isn't automatically a better deal. Compare your current loan to a new one and see the real answer: monthly savings, lifetime interest, and how many months it takes to earn back the closing costs.
You recoup the $6,000 in closing costs in about 18 months, then keep $336/mo. Worth it if you'll hold past the break-even.
How to judge a refinance
break-even months = closing costs ÷ monthly savings
lifetime saved = current remaining interest − new total interest
The monthly payment is the headline, but two numbers decide whether a refinance is actually worth it. The break-even tells you how long you must keep the loan just to recover the closing costs: refinance and sell six months later and you've simply paid fees for nothing. The lifetime interest catches the trap of resetting a loan you're most of the way through: dropping a 27-year-remaining loan into a fresh 30-year term can raise total interest even at a lower rate, because you've stretched the borrowing back out.
When a refinance clearly wins
A meaningful rate drop, a long remaining hold, and a break-even you'll comfortably pass. Shortening the term (30 to 15) when you can absorb the higher payment is the strongest version: lower rate and less time both cut interest.
Refinance questions
What is the break-even point on a refinance?
It's the number of months of payment savings it takes to recoup the closing costs. If a refinance costs $6,000 and saves $250 a month, the break-even is 24 months. If you expect to sell or refinance again before then, the numbers don't pay off: you've paid the fees without collecting enough savings.
Does a lower payment always mean a better refinance?
No, and this is the most common mistake. Resetting the loan to a new 30-year term lowers the monthly payment but can increase total interest even at a lower rate, because you're borrowing the money for longer. Always compare lifetime interest, which is why this calculator shows it.
How does a cash-out refinance work?
You replace your loan with a new, larger one and take the difference in cash. It raises both the balance and the payment, so it only makes sense when that cash is put to work earning more than the new rate. The classic use is pulling equity out of one rental to fund the down payment on the next, which is the refinance step in a BRRRR.
What are typical refinance closing costs?
Usually 2 to 5 percent of the loan amount, covering lender fees, appraisal, title, and recording. Some lenders offer no-closing-cost refinances that fold the fees into a slightly higher rate. Run both scenarios through the break-even above to see which actually costs less over your holding period.
Every calculator
Refinancing a rental?
Faro shows what the new payment does to cash flow and DSCR across the whole deal: paste the property to see it.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.