What this calculator includes
- Fixed-rate fully amortizing mortgage comparison using current balance and remaining months.
- Upfront fees, financed fees, lender credits and temporary closing liquidity entered separately.
- Same-date cumulative cash and remaining-principal comparison, including the first nonnegative economic break-even month.
- Independent schedules through both payoff dates, balance chart and complete CSV.
- Zero-rate support, explicit no-payment-savings states, reset, currency labels and print.
How to use the mortgage refinance calculator
- Enter the current unpaid principal, current fixed annual note rate and months remaining. Do not restart the existing mortgage at its original term.
- Enter the new note rate and proposed term. Rates here are your assumptions or actual quote details; the calculator does not supply a current market offer.
- Separate transaction fees paid upfront from fees financed into the new balance. Enter lender credits only against the upfront fee bucket, and do not repeat any financed amount there.
- Choose the number of months until you expect to sell, repay or refinance again. Both options are compared at that same date, even if one loan has already been paid off.
- Optionally enter taxes, homeowners insurance, HOA, mortgage insurance and temporary closing liquidity. Review their timing assumptions, then compare payments, interest, cash and balances.
- Download both schedules and compare the modeled figures with a lender’s Loan Estimate. Check costs, payment timing and any unsupported loan features separately.
Refinance payment formula and same-date cost comparison
For principal P, monthly note rate i and n remaining payments, principal-and-interest payment M = P×i/[1−(1+i)^(−n)]. At zero interest, M = P/n. The current schedule uses today’s outstanding balance and remaining term. The new schedule starts with that balance plus financed transaction fees.
Each month’s interest = opening principal × monthly rate. Principal reduction = actual P&I payment − interest. The final payment is capped or adjusted to remaining balance plus interest. This model rounds the regular payment to cents while retaining interest precision internally; lender daily-interest and rounding conventions can differ.
At holding month h, keep-current cost = cumulative current cash payments through h + outstanding current principal at h. Refinance cost = net upfront transaction fees + cumulative new cash payments through h + outstanding new principal at h. Positive current-cost minus refinance-cost favors refinancing under the entered assumptions.
Including outstanding principal matters when terms differ. A smaller payment can leave a larger balance at sale. Financing fees increases the new principal and associated interest; adding those fees again to upfront cash would double count them. The common starting mortgage principal cancels from the difference.
The simple payment threshold rounds net upfront fees/positive initial monthly saving up to a whole month. It is shown only without financed fees. It assumes the initial saving persists, so a threshold beyond either payoff date is flagged. It does not establish that all later dates are cheaper: use the full schedule to see how the comparison changes.
Refinance examples: fee recovery, term changes and zero interest
| Scenario | Calculation | Meaning |
|---|---|---|
| Simple fee recovery | 6,000 net upfront fees / 250 positive monthly saving = 24 months | Requires the assumed saving to continue; inspect balances too |
| Zero-interest loan | 12,000 principal / 12 months = 1,000 P&I | No interest; payment is all principal |
| Identical loans, no fees | Same balance, note rate and term | Zero payment and same-horizon cost difference |
| Finance 5,000 of fees | 250,000 current balance + 5,000 = 255,000 new principal | Do not also add 5,000 to upfront fees |
| Credits offset fees | 6,000 upfront fees − 1,000 credits = 5,000 net upfront | Credits can involve a different quoted note rate |
| Shorter new term | A higher payment can reduce principal faster | No simple payment saving does not prove no total-cost benefit |
Default example: 250,000 unpaid balance, 6.5% current note rate, 300 months remaining, 5.5% new note rate, 300 new months, 6,000 upfront fees and a 60-month holding period. These assumptions are deliberately editable, not a statement of current market rates. Read the current and new schedule together rather than treating the lower-rate label as a conclusion.
Extending the same principal into a longer term may reduce the monthly payment while increasing lifetime interest. A shorter term may raise monthly payments but leave substantially less debt at the same holding date. Those are distinct cash-flow and cost decisions.
Classify closing costs before calculating break-even
Enter irreversible transaction charges such as origination, appraisal and title charges in the correct upfront or financed bucket. Discount points can be entered as an actual currency amount included in fees; enter the corresponding quoted note rate separately. No fixed points-to-rate conversion is assumed.
Lender credits reduce upfront transaction fees in this model. They do not automatically reduce financed fees or produce unrestricted cash back. The quoted rate may differ when taking credits, so compare complete offers rather than changing credits alone and assuming everything else stays equal.
Escrow deposits, prepaid property taxes and insurance can affect cash needed at closing without being new irreversible transaction costs in the same way. This tool shows a separate temporary liquidity amount but does not model escrow refunds, prepaid timing or tax benefits. Reconcile the closing ledger with the lender if timing materially affects the decision.
Decide which comparison answers your refinance question
For monthly affordability, review P&I plus your entered housing costs. For an expected sale or another refinance, review cumulative cash plus debt remaining at that date. For the full loan lives, compare scheduled interest and fees while recognizing that the payoff dates differ. None of these is a guaranteed benefit or lender approval.
A first fee-recovery point may not remain favorable forever if a new term runs much longer. The schedule therefore keeps both paths visible through the longer payoff date or holding horizon. Loan payments stop at payoff; ongoing property expenses do not disappear merely because mortgage principal reaches zero.
Mortgage insurance is not assumed to cancel at an equity threshold. If cancellation would occur before payoff, this constant-cost model will not reproduce that changing path. Likewise, adjustable rates, cash-out borrowing, penalties and extra payments need a different schedule. Do not force those cases into this rate-and-term model.
Common refinance calculation mistakes
Do not enter APR as the note rate: APR incorporates certain financing charges, while interest accrues from the contractual note rate. Do not compare the original mortgage amount with today’s new refinance balance, or compare loans over different sale dates and call the result a same-horizon saving.
Do not count financed fees both in principal and upfront. Do not treat all cash to close as an unrecoverable fee. Do not assume a lower monthly payment guarantees lower lifetime interest, especially when restarting a long term.
The result is undiscounted. It does not calculate the return you could earn on freed cash, the time value of paying costs today, interest tax deductions, home appreciation or refinance eligibility. Those assumptions can change an actual decision and should be evaluated separately.
Assumptions and limits
This is a fixed-rate, fully amortizing, rate-and-term mortgage model. No cash-out/cash-in, ARM resets, balloon payments, extra principal, daily accrual, prepayment penalties, lender underwriting, live rates or tax deductions are modeled. Use note rate, not APR, for interest: monthly rate = annual note rate/12. Regular principal-and-interest payments round to cents; monthly interest keeps precision internally, and final payoff adjusts the rounding residual. Other housing costs stay constant through the horizon, including after payoff; entered mortgage insurance stays constant until modeled loan payoff, with no earlier cancellation inferred. Lender credits offset upfront fees only and cannot create a cash rebate. Financed fees increase new principal once. Escrow/prepaids are liquidity amounts excluded from irreversible transaction cost; their recovery timing is not modeled. Same-horizon comparison is undiscounted and excludes investment returns, tax effects and home-price changes. Both options retain the same home and start from the same outstanding mortgage debt. Currency labels do not convert values. Tiny balances whose rounded payment cannot amortize are outside support.
Frequently asked questions
How do I calculate refinance break-even?
The simple fee-recovery threshold is net upfront transaction fees divided by positive monthly payment savings, rounded up. Compare remaining principal at the same holding date for a fuller cost assessment.
Why can a lower monthly payment cost more overall?
A longer new term can spread principal over more months and leave a larger balance at sale or create more lifetime interest. Check both schedules and the same-date comparison.
Can I roll closing costs into the new mortgage?
Yes, enter them in financed fees. They increase new principal and interest once; do not repeat the same fees as upfront charges.
Does this calculator support cash-out or adjustable-rate refinancing?
No. This release covers fixed-rate, fully amortizing rate-and-term mortgages. Cash-out, cash-in, ARM changes and balloon structures need a different model.
Should I enter interest rate or APR?
Enter the annual note interest rate. APR is a broader financing-cost disclosure and is not used as the monthly accrual rate here.
What if there are no monthly payment savings?
There is no simple payment-savings threshold. A shorter term can still reduce total cost; examine cash paid plus principal remaining at your selected date.
Does cash to close equal refinance cost?
Not always. Transaction fees, financed charges, lender credits and temporary escrow or prepaids have different roles. This tool separates them and does not model escrow refund timing.
Are rates live and is this a lender offer?
No. Defaults are fictional examples; enter your own quote or assumption. The tool does not make an eligibility decision or guarantee savings.
Method references
Use the right measure for the next question
Keep profit, cash, borrowing cost and mathematical proportions separate. Follow the linked method when interpreting these results.
Understand refinance break-even before decidingExplore Pro plan comparisonsPublished by MyBreakeven. Method and examples checked . Business calculation methodology · Check scope and corrections.