How the holding-period comparison works
Both mortgages use the standard fixed-rate amortization formula. For the period you expect to remain in the home, the calculator adds scheduled payments and the estimated balance still owed at exit. The refinance path also includes transaction costs and subtracts cash received through cash-out.
This approach captures both cash flow and equity. Financing costs moves them into the new balance instead of treating them as cash paid at closing.
What to compare before refinancing
Savings by expected move
The estimated economic difference over your holding period, including the mortgage balance you would need to repay when selling.
Monthly payment change
The difference in principal and interest only. A lower payment is not proof of lower total cost.
Cash-flow break-even
Transaction costs divided by monthly payment savings. It does not include equity differences or home appreciation.
Transaction costs
Other entered closing costs plus discount points. Review the lender's Loan Estimate for actual charges.
Important limitations
- Designed for fixed-rate, fully amortizing mortgages with monthly payments.
- Excludes taxes, insurance, mortgage insurance, escrow changes, prepayment penalties, tax effects, home appreciation, and selling costs.
- Does not determine whether paying discount points produces the entered interest rate; use the actual lender quote.
- Estimated balances can differ from lender payoff statements because of timing, daily interest, and rounding.
Frequently asked questions
How is this different from a basic refinance calculator?
This mortgage-specific comparison includes discount points, cash-out, financed transaction costs, remaining loan balances, and the number of years you expect to keep the home.
How are mortgage points calculated?
One discount point equals 1% of the new base mortgage amount, including cash-out but before financed transaction costs in this calculator.
Why does the balance at my move date matter?
A lower payment can result from extending the term while paying principal more slowly. Comparing the estimated balance at exit captures that equity difference.
Does the calculator include taxes and insurance?
No. It compares principal and interest because property taxes, homeowners insurance, mortgage insurance, and escrow can change independently.