Refinance Calculator

How to use the calculator

1. Current loan: the balance you still owe, your interest rate and the months left on the loan.
2. Current payment (optional): principal and interest only, without taxes or insurance. Leave it empty and it is computed from the balance, rate and months left. If you enter more, the old loan is projected with that payment and pays off sooner.
3. New loan: the offered rate and the term in years.
4. Costs: closing costs in dollars and discount points as a percentage of the loan. Tick roll costs into the loan if you won't pay them at closing.
5. Cash-out (advanced): extra money you borrow on top of the balance.

The simple break-even appears only when the new payment is lower; the true break-even appears once the costs are recovered.

How the calculator works

Both loans use the standard fixed-rate formula, M = P × r ÷ (1 − (1 + r)^−n), with r = annual rate ÷ 12 and n = months, and are then simulated month by month.

• New loan amount = balance + cash-out. With costs rolled in, it is (balance + cash-out + closing costs) ÷ (1 − points %), because points are charged on the final loan amount.
• Simple break-even = (closing costs + points) ÷ monthly savings.
• True break-even = the first month in which costs plus interest paid on the new loan are no more than the interest you would have paid on the old one. That is the same as comparing everything paid so far plus the balance still owed on each path, so it accounts for a new 30-year loan repaying principal more slowly.
• Lifetime savings = remaining interest on the old loan − interest on the new loan − costs.

Property taxes, insurance, PMI, adjustable rates, prepayment penalties and any tax deduction for interest or points are not included.

Examples

All four start from a $280,000 balance at 7.25% with 324 months left, a payment of $1,971.74, and $5,500 of closing costs.

What the rows show

Row 1: the simple break-even is 20.3 months, but the true one is month 22, because the fresh 30-year loan pays down principal more slowly. In the yearly table, net savings peak at $36,614.75 after year 20, then shrink: the old balance falls faster and accrues less interest each year, and the new loan runs three years longer.

Row 2: a smaller rate cut still lowers the payment, with a simple break-even of 41.6 months, yet you pay more interest in total because the clock restarts at 30 years.

Row 3: a shorter term costs a little more each month but saves the most interest.

Row 4: rolling in the costs means no cash at closing, but the loan grows to $288,383.84, the point costs $2,883.84 and the simple break-even stretches to 38.2 months.

How to read your results

Compare the break-even month with how long you expect to keep the loan. The CFPB suggests comparing total costs over the shortest, longest and most likely time you might keep it. If you'll probably sell or refinance again before the true break-even, the costs may never pay back.

With cash-out, the comparison includes interest on the extra money, so "savings" mixes two decisions. Borrowing $30,000 more in the row 1 case gives a $1,883.59 payment and −$14,748.57 lifetime savings. To test lender credits, enter the lower costs with the higher rate.