A lower rate can reduce your monthly payment, but the real savings depends on your loan balance, term, taxes, insurance, closing costs, and how long you keep the loan.
Why the loan balance matters
A one-point rate change usually saves more dollars on a larger loan balance than on a smaller balance. The remaining term also matters because a longer term spreads the effect across more payments.
Do not ignore fees
If you are refinancing to capture a lower rate, compare the monthly savings with closing costs. A lower payment may still take years to break even.
Use the calculator below to compare different rate scenarios. Try the same home price and down payment with rates one percentage point apart.
Estimated monthly payment$0Principal, interest, taxes, and insurance estimate.
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