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How this refinance calculator works
We compute your current monthly payment from your remaining balance, rate, and months left, and the new payment from the offered rate and term. The difference is your monthly saving (if any). Closing costs divided by that saving gives your break-even month, the first month you are actually ahead.
- Payment formula: M = P × r(1+r)n / ((1+r)n − 1), 0% APR amortizes linearly.
- Lifetime savings: remaining interest on the old loan minus (total interest on the new loan plus closing costs).
- We flag term extension when the new term reaches further out than your current loan, so the monthly drop is not mistaken for free money.
Frequently asked questions
What is the break-even month on a refinance?
It is the number of months of monthly savings needed to recover the closing costs you pay upfront. If your closing costs are $5,000 and the refi saves $400/mo, you break even in month 13. Before that, refinancing has cost you more than it has saved.
Why can a lower monthly payment still cost me more?
If you refinance into a fresh 30 year loan when only 22 years were left on your current one, you have stretched the loan by 8 years. Total interest paid over those extra years can outweigh the monthly savings. Look at lifetime savings, not just the monthly drop.
Does this include taxes, insurance, or PMI?
No. The break-even math is on principal and interest only, because that is what changes when you refinance. Property taxes, homeowners insurance, and PMI generally do not, so including them on both sides would cancel out.
How do I figure out my remaining months and balance?
Check your latest mortgage statement: it shows principal balance and the original loan term. Subtract months already paid from the original term in months (e.g. 360 minus 60 for a 5-year-old 30-year loan = 300 remaining months).