Refinance Calculator

Companion guide: Refinance and break-even arithmetic walks through every step this calculator runs — two payments priced with the same formula, their difference, the break-even quotient and the lifetime-interest line — on fictional loans, and lists what the comparison leaves out. This page covers how to read this tool's result box and what a longer, equal or shorter new term changes. Every explainer on the site is listed under Guides.

Reading a refinance

A refinance replaces your current loan with a new one on the same balance. The calculator prices both: the payment that clears the balance over the years you have left at the current rate, and the payment that clears the same balance over the new term at the new rate. In the worked example — a fictional $300,000 balance at 7.5% with 27 years left, refinanced to 6% over 30 years with $5,000 in closing costs — the payment drops from $2,162.20 to $1,798.65, about $363.55 a month, and you recoup the closing costs in roughly 1 yr 2 mo. The current loan would accrue $400,553 more interest over its remaining 324 months; the new loan accrues $347,515 over its 360. After the closing costs, that is a lifetime saving of $48,039. These figures come from the same tested engine as the calculator above, computed when the page is built; every rate and amount in the examples is an illustrative input chosen for the arithmetic, not a quote.

What the engine computes, step by step

The form hands six inputs to one engine function — the balance, two annual rates, two terms in years and the closing costs — which validates them, runs the steps below in order and returns a typed result, or an explicit, human-readable error if an input cannot be used. The interface layer only formats what comes back; it never does its own arithmetic.

Current payment. The standard amortized-loan (PMT) formula with monthly compounding — the convention behind US mortgages and most consumer loans — on the balance, the current rate ÷ 12 and the remaining years × 12: $300,000 at 7.5% over 324 months gives $2,162.20.
New payment. The same formula with the new rate and the new term × 12: $300,000 at 6% over 360 months gives $1,798.65. The closing costs do not enter this step.
Monthly saving. Current payment − new payment: $363.55, shown as "lower per month" when positive and "higher per month" when negative.
Break-even on closing costs. Closing costs ÷ monthly saving: $5,000 ÷ $363.55 = 13.8 months, rounded up to 1 yr 2 mo because a partial month of savings has not been collected yet. When the saving is zero or negative the engine returns no break-even, and the line reads "never (new payment is higher)".
Interest left on the current loan. Current payment × remaining months − balance: $2,162.20 × 324 − $300,000 = $400,553, counted forward from the balance you enter.
Interest over the new loan. New payment × new months − balance: $1,798.65 × 360 − $300,000 = $347,515.
Lifetime interest change. Interest left − new interest − closing costs: $400,553 − $347,515 − $5,000 = $48,039, shown as "saved (after closing costs)"; a negative result is shown as "more".

The same offer at the same remaining term

Example A changes two things at once: the rate falls, and the term stretches from the 27 years left to 30. Example B keeps the fictional offer — 6% with $5,000 of costs — but sets the new term to the 27 years remaining, so only the rate changes. The new payment is $1,871.96 instead of $1,798.65, because the same balance is cleared in 36 fewer months; the monthly saving shrinks to $290.25 and the break-even lengthens to 1 yr 6 mo. The lifetime line moves the other way: the new loan accrues $306,514 instead of $347,515, so the saving after costs is $89,040 rather than $48,039 — $41,001 more. Stretching the term lowers each payment and lengthens the count, and those two effects pull the two lines in opposite directions. The engine compares; which line matters more is not a question the arithmetic answers.

A shorter new term: a higher payment and no break-even

Example C takes the same fictional offer over 15 years. The new payment is $2,531.57, $369.37 a month higher than the current $2,162.20, so the top line reads "higher per month" and the break-even line reads "never (new payment is higher)": with no monthly saving there is nothing to recoup the costs with. The lifetime line still computes: $155,683 over 180 months against the $400,553 left on the current path, which after the $5,000 of costs reads $239,871 saved. Both lines are correct at once: the payment is higher because the balance is cleared in fewer months, and the interest is lower for the same reason.

Examples A to C: the same fictional offer across three new terms
New term	New payment	Monthly change	Break-even	Lifetime interest change
30 years (Example A)	$1,798.65	$363.55 lower	1 yr 2 mo	$48,039 saved
27 years (Example B)	$1,871.96	$290.25 lower	1 yr 6 mo	$89,040 saved
15 years (Example C)	$2,531.57	$369.37 higher	never (new payment is higher)	$239,871 saved

The term reset trap

Lowering your monthly payment by restarting a fresh 30-year term can still increase the total interest you pay, because you stretch the loan back out. Example D shows the engine doing exactly that on a different fictional loan: a $220,000 balance at 6.25% with 12 years left, refinanced to 5.75% over 30 years with $4,000 of closing costs. The payment falls from $2,175.44 to $1,283.86 — $891.58 a month lower — and the break-even is only 5 mo. But the current loan had only $93,263 of interest left over its 144 months, while the new loan accrues $242,190 over 360, so the lifetime line reads $152,926 more. The lower payment is real, and so is the higher total: the balance is spread over 216 additional months, and interest is charged on it for every one of them. The Refinance Break-Even Calculator runs the same comparison with terms entered to the month and an option to roll the costs into the loan; the Mortgage Payoff Calculator computes the effect of extra principal on a loan whose term is left unchanged.

The reference figure, recomputed

The methodology page names the figure the engine is validated against: a $200,000 loan at 6% over 30 years. Entered here as both the current loan and the offer, with no closing costs, the engine returns a current payment of $1,199.10, an identical new payment, a monthly saving of $0.00 and no break-even. The interest over the new loan is $231,676, the figure the methodology page and the automated tests expect; the amortization engine's month-by-month schedule of the same loan reports $231,676.38 against this closed-form $231,676.38, and the build checks that they agree to the cent. If the copy and the code ever disagreed, the site would fail to build rather than publish inconsistent numbers.

How to read the result

The bold first line is the monthly saving — "$363.55 lower per month" in Example A — or "higher per month" when the new payment is the larger one.
Current payment and New payment are the two PMT figures, principal and interest only. The current payment is recomputed from the balance, rate and years you enter, so it can differ from a statement figure that includes escrow items or reflects a term that is not a whole number of years.
Break-even on closing costs is the engine's quotient rounded up to whole months — 1 yr 2 mo for Example A — or "never (new payment is higher)" when there is no monthly saving. With the closing-costs field blank the form passes zero to the engine and the line shows 0 mo.
Lifetime interest change is shown in whole dollars, as "saved (after closing costs)" or as "more". It is the only line that includes the closing costs.

Money is shown to the cent, or to whole dollars for large totals like lifetime interest; internally every calculation keeps the full precision of IEEE-754 double-precision arithmetic, and nothing is rounded between steps. Your lender's figure may differ by a few cents depending on their rounding and day-count conventions — the difference is presentational, not an error.

Where the calculator stops

The limits are the engine's, and the methodology page states them. The calculators model fixed-rate, fully amortizing loans. They do not model adjustable-rate mortgages, interest-only periods, balloon payments, or negative amortization: both payments here are fixed for every month of their terms. The comparison is principal and interest only — property tax, insurance, PMI and HOA are not inputs; on the Mortgage Calculator they are estimates from the rates and amounts you enter. Terms come from whole-year drop-downs and the closing costs are treated as paid in cash; the Refinance Break-Even Calculator accepts terms to the month and can finance the costs into the new balance. The lifetime line assumes both loans run to the end of their terms, and how long the loan will actually be kept is not an input — the break-even is a month count to set against that. There is no calendar date and no discounting. Inputs are validated before any arithmetic runs: non-numeric, negative, infinite or out-of-range values return a plain-language message instead of a number — a negative closing-cost figure is refused with "The closing costs cannot be negative." and a rate over 100% with "Enter an interest rate below 100%." And a correct calculation can still be the wrong calculation for your situation — choosing the right loan for a real-world decision is judgment we cannot automate.

Frequently asked questions

What is the break-even point?

The closing costs you enter divided by the monthly saving: how many months of the lower payment it takes to add up to the costs. In Example A, $5,000 ÷ $363.55 is 13.8 months, shown as 1 yr 2 mo because the result box rounds a partial month up. The costs are recovered only once the loan has been held past that month.

Does a lower rate always mean less lifetime interest?

No. Resetting to a new 30-year term can raise total lifetime interest even at a lower rate, because you restart the clock. In Example D the payment falls by $891.58 a month and the costs are recouped in 5 mo, yet the lifetime line reads $152,926 more, because the new loan runs 216 months longer than the current one would have. The calculator reports all three lines together.

What counts as closing costs?

Whatever you are charged to open the new loan — lender origination fees, appraisal, title insurance, recording, and prepaid items — entered as one dollar figure; the engine divides exactly the number you type by the monthly saving. Some lenders offer "no-cost" refinances that fold costs into a higher rate; enter the true costs here for an honest break-even.

Why compare at the same remaining term?

Because it isolates the rate: both payments then clear the same balance over the same number of months, so the only difference between them is the rate. In Example B the monthly saving is $290.25 rather than Example A's $363.55, the break-even 1 yr 6 mo rather than 1 yr 2 mo, and the lifetime saving $89,040 rather than $48,039.

Why does the break-even line say "never (new payment is higher)"?

Because the new payment is not lower than the current one, so there is no monthly saving to recoup the costs with, and the engine returns no break-even rather than dividing by zero or a negative number. Example C — the fictional offer over 15 years — produces a payment $369.37 a month higher and that line, while its lifetime line shows $239,871 saved after costs.

What does the "Lifetime interest change" line include?

Three figures and nothing else: the interest left on the current loan (current payment × remaining months − balance), minus the interest over the whole new loan (new payment × new months − balance), minus the closing costs. In Example A that is $400,553 − $347,515 − $5,000 = $48,039, shown as "saved (after closing costs)"; a negative result is shown as "more". Property tax, insurance, PMI and HOA are not part of it.

What happens if I leave the closing costs blank?

The form passes zero to the engine. The payments and the interest figures are unchanged, the lifetime line no longer subtracts any costs — $53,039 saved in Example A instead of $48,039 — and the break-even is zero divided by the monthly saving, displayed as 0 mo, since there is nothing to recoup.

Why might my lender's payment differ from the calculator by a few cents?

Internally the engine keeps the full precision of IEEE-754 double-precision arithmetic and rounds only on screen, to the cent (or to whole dollars for large totals like lifetime interest). Your lender's figure may differ by a few cents depending on their rounding and day-count conventions — the difference is presentational, not an error.

Not financial advice: a general educational estimate. Actual rates, costs, and eligibility vary by lender and credit profile — get a written Loan Estimate before deciding. Values are processed locally in your browser and never transmitted. See the methodology page.

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