| At Horizon | Keep Current | Refinance | Difference |
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| Payments made | |||
| Remaining balance | |||
| Interest paid | |||
| Net borrowing cost* |
View New Loan Amortization Schedule
| Month | Payment | Principal | Interest | Balance |
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What Break-Even Does, and Does Not, Tell You
A common refinance break-even calculation divides net upfront refinance costs by monthly payment savings. It answers a useful cash-flow question: how many months of lower payments would it take to recover the upfront cost?
But a lower payment can come from restarting the loan over a longer term, not just from getting a lower interest rate. That is why this calculator also compares the remaining balance, interest paid and borrowing cost at the time horizon you choose.
How the Refinance Comparison Works
Both mortgages are modeled month by month as fixed-rate amortizing loans. The current mortgage uses your remaining balance, current rate and remaining term. The refinance starts with your current balance plus any cash-out, and adds closing costs to principal only when you select the financing option.
The horizon comparison uses the shorter of your chosen horizon and each loan's remaining term. “Net borrowing cost” is modeled as interest paid plus refinance costs paid upfront or financed, less lender credits. Cash-out itself is borrowed principal rather than a refinance cost, so it is not counted as a fee or saving.
Mortgage Refinance FAQ
Does a lower monthly payment always mean refinancing saves money?
No. A lower payment can result from a lower rate, a longer repayment term, or both. Extending the term can reduce the payment while increasing the amount of interest paid over time.
Should I roll closing costs into the new mortgage?
Financing closing costs can reduce cash due at closing, but it raises the new principal balance and can increase total interest. CFPB notes that “no-closing-cost” refinances generally still involve costs that may be covered through a higher rate or added to the loan amount.
What are discount points and lender credits?
Discount points are upfront amounts paid in exchange for a lower interest rate. Lender credits reduce upfront closing costs, generally in exchange for accepting a higher interest rate. Compare actual Loan Estimates rather than assuming either option is automatically cheaper.
What is a cash-out refinance?
A cash-out refinance replaces the existing mortgage with a larger new loan and provides some of the difference as cash. The extra amount is debt you will repay with interest, so this calculator keeps cash-out separate from refinance fees.
Which costs should I enter?
Use the refinance costs relevant to replacing the loan, such as lender/origination and applicable third-party closing costs. Prepaid taxes, insurance or escrow funding can complicate comparisons because they are not always economic costs of refinancing in the same way as lender fees. Your Loan Estimate and Closing Disclosure provide the transaction-specific figures.
Consumer guidance: CFPB mortgage refinance definition and term guidance, CFPB on no-closing-cost refinances, and CFPB on points and lender credits.