Does it show current refinance rates?

No. Enter a rate from your own scenario or lender disclosure.

What does break-even mean here?

It is the first whole month when cumulative scheduled-payment reduction equals or exceeds upfront closing costs, assuming the difference remains constant.

What if the proposed payment is higher?

The tool reports that simple payment break-even is not reached. Other objectives may exist, but they are not evaluated.

Are closing costs financed?

No. This version treats the entered costs as paid upfront. If costs are added to the balance, the proposed principal and results would differ.

Is a positive cost difference guaranteed savings?

No. It is an estimate under entered assumptions and omits time value, taxes, future changes and transaction-specific charges.

Refinance Comparison and Break-Even Calculator

Compare two fixed-rate payment paths without treating a lower payment as automatic savings.

Remaining balance

Closing-cost break-even

Total scheduled-cost comparison

CurrencyOriginal loan principalCurrent fixed annual rateOriginal term in monthsScheduled payments already madeMust be a whole number smaller than the original term.Proposed fixed annual rateEnter a scenario or quoted note rate; this calculator does not supply live rates.Proposed term in monthsUpfront refinance closing costsEnter costs paid separately. The model does not add them to the new balance.

How to Compare a Refinance Scenario

Reconstruct the current loan from its original terms, then enter one proposed fixed-rate refinance and upfront closing costs.

Enter the original principal, fixed rate and term.

A lower payment can come from a longer term

Extending repayment may reduce the monthly amount while increasing the time in debt or total cost. Review all comparison fields.

Comparison Intent—not Another Mortgage Calculator

This tool first estimates the current remaining balance after the stated number of scheduled payments. It then amortizes that balance under the proposed rate and term. Simple break-even exists only when the proposed scheduled payment is lower; it divides upfront closing costs by that monthly difference and rounds up to a whole month. Total scheduled-cost comparison includes current remaining payments versus proposed payments plus upfront costs, but excludes discounting and transaction-specific tax effects.

Refinance Comparison Examples

Lower-rate, same remaining term

Current and proposed terms

originalPrincipal:300000

originalAnnualRate:6.5

originalTermMonths:360

paymentsMade:60

proposedAnnualRate:5.5

proposedTermMonths:300

closingCosts:6000

Estimated comparison

About 171.64 lower monthly payment; simple break-even in 35 months

The estimated balance is 280,832.93. Closing costs are treated as upfront and are not financed.

No payment break-even

Current and proposed terms

originalPrincipal:100000

originalAnnualRate:3

originalTermMonths:120

paymentsMade:12

proposedAnnualRate:8

proposedTermMonths:108

closingCosts:2000

Estimated comparison

Simple payment break-even is not reached

The proposed scheduled payment is higher, so closing costs cannot be recovered through a monthly payment reduction.

Verify the actual payoff

A current servicer payoff quote may differ from an amortization estimate because of daily interest and account-specific charges.

Frequently Asked Questions

No. It organizes assumptions and arithmetic but does not provide individualized financial advice.

Still have questions about this calculation?

Try the Calculator

Refinance Balance and Break-Even Formulas

The comparison combines an amortized remaining-balance equation with a deliberately simple cash break-even measure.

Formula

Bₖ = P(1 + r)^k − M((1 + r)^k − 1) / r

Remaining balance

Bₖ = P(1 + r)^k − M((1 + r)^k − 1) / r

Proposed payment

Mnew = Bₖ × rnew / (1 − (1 + rnew)^−nnew), or Bₖ / nnew at 0%

Simple break-even

months = ceiling(upfront closing costs / (current payment − proposed payment))

Scheduled-cost difference

current remaining scheduled payments − (proposed scheduled payments + upfront closing costs)

Scientific Background

Simple break-even does not discount future cash flows and cannot capture opportunity cost, taxes or uncertain holding periods. Use it as one comparison metric.