How the refinance comparison works
The calculator applies the standard fixed-payment amortization formula to two paths: the remaining balance, rate, and term of your current loan; and the rate and term of the proposed refinance. It assumes monthly payments and a fixed interest rate for both loans.
- M:
- monthly principal and interest
- P:
- loan principal
- r:
- monthly interest rate
- n:
- number of monthly payments
What the results mean
Monthly payment change
Current principal-and-interest payment minus the proposed payment. It does not include taxes, insurance, or association fees.
Lifetime cost difference
All remaining current-loan payments minus all proposed-loan payments and closing costs. A positive result favors refinancing.
Interest difference
Remaining current-loan interest minus proposed-loan interest. If costs are financed, this includes interest charged on those added costs.
Cost break-even
Closing costs divided by monthly payment savings, rounded up to a whole month. This is not a home-equity or resale break-even analysis.
Important limitations
- Designed for conventional fixed-rate, fully amortizing loans with monthly payments.
- Does not model adjustable rates, interest-only periods, balloon payments, prepayment penalties, taxes, insurance, escrow changes, or tax deductions.
- Assumes the current balance amortizes over the remaining term entered; your lender statement may differ because of payment timing and rounding.
- Rates and fees are values you provide, not live lender quotes or offers.
Frequently asked questions
What does this refinance calculator compare?
It compares the remaining scheduled principal-and-interest payments on your current fixed-rate loan with a proposed fixed-rate refinance, including the closing costs you enter.
How is the break-even point calculated?
The calculator divides closing costs by estimated monthly payment savings. If the new payment is not lower, it does not show a monthly-payment break-even point.
Does a lower monthly payment always mean I save money?
No. Extending the term can lower the payment while increasing total interest and total remaining cost. Review the lifetime cost difference as well as the payment change.
Should I finance the closing costs?
Financing costs reduces cash needed at closing but increases the new principal and usually the interest paid. Compare both settings and consider how long you expect to keep the loan.