Refinance Calculator
Keep it, refinance fresh, or refinance into the term you had left — the third option usually wins and is almost never offered.
Your current loan
You owe $326,472 with 288 payments left.
The new loan
Assumptions
Payment drops
$437.11
Break-even in 14.9 months
Lifetime interest
+$18,844
A fresh term against keeping the loan
The payment falls and the total cost rises. A fresh term resets the amortization clock, so you go back to paying mostly interest. Matching the 288 months you had left instead saves $92,585.
| Keep the current loan | $2,447.25288 payments · $378,336 lifetime interest · $221,288 over your horizon |
|---|---|
| Refinance to a fresh term | $2,010.14360 payments · $397,180 lifetime interest · $196,258 over your horizon |
| Refinance to the term you had left | $2,191.21Cheapest over your horizon288 payments · $304,595 lifetime interest · $187,907 over your horizon |
| Balance owed today | $326,472 |
| Saved by matching the term | $92,585Same rate, same costs — only the term differs |
Estimates only. A real refinance depends on the rate you are actually quoted, an appraisal, and your credit and equity at the time. Not a loan commitment or an offer of credit.
The payment goes down. The cost goes up.
Refinance advice reduces to one number: the break-even month. Divide the closing costs by the monthly saving, and if you will still be there afterwards, refinance. On the default scenario that is fifteen months against a ten-year horizon, so the answer is obviously yes.
It is also incomplete in a way that costs real money.
Six years into a thirty-year loan you have finally reached the part of the schedule where meaningful principal comes off. Refinance into a fresh thirty and that progress is discarded — not the equity, which you keep, but the position on the curve. You are back at the start, where almost every dollar is interest.
On these numbers the payment falls $437.11 a month and the total interest over the life of the loan rises $18,843.90. A rate a point and a quarter lower, and it costs more. Both things are true at once, and only one of them appears in a refinance pitch.
The clearest way to see the mechanism is to break it. Set the new rate above your current one — 7.75% against 7.5% — and the payment still falls, by about $108 a month. Nothing improved. The balance is simply being re-spread over 360 months instead of the 288 you had left. A lower payment is not evidence of a better loan; it is evidence of a longer one.
Which points at the fix. Ask for a term matching what you have left, not a fresh thirty. Same rate, same closing costs, 288 months instead of 360 — and it saves $92,584.59 in lifetime interest against the fresh-term option. The payment lands between the two: higher than the fresh refinance, still lower than what you pay today.
That option is on this page as an equal to the other two because lenders rarely volunteer it. Many will write a custom term if you ask; some will not. Either way it is worth asking for by name rather than accepting the thirty you are handed.
One caveat on the comparison: if you intend to make extra payments, a fresh term with voluntary overpayment gets you most of the matched-term result while keeping the flexibility to stop. The mortgage calculator prices what extra payments are worth, and if you are weighing quotes rather than terms, the loan comparison calculator handles that.
Methodology
- Current balance = the original loan carried forward by the payments already made, computed as an exact rational.
- Break-even = closing costs ÷ monthly saving against the fresh-term option.
- Lifetime interest = total payments over each path less the principal repaid. Compared across all three paths.
- Cost over your horizon = interest paid across the years you expect to stay, plus any closing costs paid in cash. This is the number the three paths are ranked on.
Rolling costs into the loan moves them out of the cash column and into the balance, where they accrue interest for the life of the loan; both treatments are modelled.
Excluded: mortgage insurance changes on the new loan, escrow re-setup, the tax treatment of mortgage interest, prepayment penalties, and cash-out refinances where the balance rises for reasons other than costs.
Frequently asked questions
- How do you calculate a refinance break-even?
- Closing costs divided by the monthly payment saving. On the default scenario $6,500 of costs against $437.11 a month recovers in about 15 months. It is a real number and it answers a small question — when do the costs pay for themselves — while saying nothing about what the refinance costs you overall.
- Does refinancing reset my loan?
- Yes, and it is the part that gets left out. Six years into a thirty-year loan you are finally retiring meaningful principal. Take a fresh thirty and the schedule starts over: you go back to paying almost entirely interest. On the default scenario the payment drops $437 a month and the total interest over the life rises $18,844, despite a rate a point and a quarter lower.
- How do I refinance without restarting the clock?
- Ask for a term matching what you had left rather than a fresh thirty. On the default scenario the remaining term is 288 months, and refinancing into 288 months instead of 360 saves $92,584 in lifetime interest at the same rate and the same costs. The payment is higher than the fresh-term option and still lower than what you are paying now. Not every lender offers custom terms, but many do, and it is worth asking for by name.
- Can a lower rate actually cost more?
- Easily, if the term resets. The clearest demonstration is on this page: set the new rate ABOVE your current one and the payment still falls, because 288 months of balance is being re-spread over 360. A lower payment is not evidence of a better loan — it is evidence of a longer one.
- Should I roll the closing costs into the loan?
- It removes the cash outlay and raises the balance, so you pay interest on the costs for the life of the loan. It makes sense when you would otherwise not refinance at all, and less sense when you have the cash and intend to stay. The tool computes both — tick the box and watch the payment and lifetime interest move.
- What if I sell before break-even?
- Then the refinance cost you money. That is why the horizon slider is here: costs are recovered out of monthly savings, and if you leave first you paid the fees and collected only part of the benefit. The tool flags it when the break-even lands past the point you expect to sell.
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