What's a typical closing cost?

Usually 2–5% of the loan amount. On a $280k loan that's $5,600–$14,000. Some lenders offer "no-closing-cost" refinances by rolling fees into a slightly higher rate.

How much rate drop justifies a refinance?

Old rule was 1%. With current closing costs, even 0.5% can be worth it if you stay long enough — let the break-even number decide.

Refinance Calculator — embedded

Result

Monthly savings

$345.17

Current monthly payment$2,069.18
New monthly payment$1,724.01
Break-even months14 months (1.2 yrs)
Lifetime cost — current$620,752.59
Lifetime cost — new + fees$625,142.94
Lifetime savingspositive = refinance wins-$4,390.35

Refinance loses money over loan life— Break-even at month 14 (~1.2 yrs).

Keep current loan

$2,069.18/mo · $620,752.59 lifetime

Refinance to new rate

Closing costs $4,500.00 included.

$1,724.01/mo · $625,142.94 lifetime

Break-even

Stay past this point for the refi to net positive.

14 months

Rule of thumb

No-closing-cost options trade closing fees for slightly higher rate.

Old: 1% rate drop. Modern: any drop if you stay past break-even.

Source: CFPB — Should you refinance? (consumer guidance + break-even methodology); Freddie Mac Primary Mortgage Market Survey (PMMS) for current-rate context.

Not financial advice — Lifetime-cost comparison assumes you hold each loan to maturity. Real refinances often re-amortize you to year-1 of a new schedule, increasing total interest even at a lower rate. Cash-out refi changes the math. Doesn't model PMI, prepayment penalties, or tax effects of mortgage interest deduction.

How to use this calculator

Enter your current loan balance, rate, and years remaining.
Type the new rate you've been quoted and the new term.
Add the lender's estimated closing costs (often 2–5% of loan).
Check the break-even — only refinance if you'll stay past that point.

About this tool

Refinancing is a bet: you pay closing costs upfront in exchange for a lower monthly payment over the new loan's life. The two numbers that matter are the break-even month (how long until the monthly savings cover the closing fees) and the lifetime savings (does the deal still win once you account for the longer term you're probably extending into?). Rule of thumb: if you'll stay in the home longer than the break-even period and the lifetime savings are positive, refinance. If either fails, stick with the current loan.