Refinance Calculator

What this refinance calculator does

Refinancing replaces an existing mortgage with a new loan. This calculator compares the remaining current loan with a new loan, including the monthly payment, total interest, points, costs, break-even time, and lifetime savings.

The current loan term is derived from the remaining balance, current payment, and current rate. Enter the new loan term, rate, points, costs, and any cash-out amount to see how the numbers compare.

How to use this calculator

1. Enter the current balance, current monthly payment, and current interest rate.
2. Enter the new loan term and new interest rate.
3. Enter points as a percentage of the new loan and any costs and fees.
4. Enter a cash-out amount if the new loan will be larger than the current balance.
5. Click Calculate.

The default example has a $250,000 balance at 7% with a $1,800 payment. The new loan is 20 years at 6% with 2 points and $1,500 in costs.

Refinance formulas

The remaining current term is solved from the balance, payment, and rate:

n = −ln(1 − balance × monthly rate / payment) / ln(1 + monthly rate)

The new monthly payment uses the new loan amount, new rate, and new term:

M = L × (r / 12) / (1 − (1 + r / 12)^(−12 × years))

Upfront cost is:

Upfront cost = New loan × points % + costs and fees

The break-even estimate compares upfront cost with the first-month interest savings between the old and new rates. Lifetime savings compare the remaining current payments with the new payments plus upfront cost.

What the results include

• Current remaining months: the time needed to pay off the current balance at the current payment.
• Current total payments and interest: the remaining cost of the current loan.
• New loan amount: the current balance plus any cash out.
• New monthly payment: principal and interest on the new loan.
• New total payments and interest: the cost over the new term.
• Upfront cost: points plus costs and fees.
• Monthly savings: current payment minus new payment.
• Break-even: months needed to recover the upfront cost.
• Lifetime savings: current remaining cost minus the new loan cost and upfront cost.

Assumptions and limitations

The calculator assumes fixed-rate, fully amortizing loans and constant rates. It does not include taxes, insurance, escrow changes, prepayment penalties, or closing-cost credits. The current loan length is derived from the balance, payment, and rate, so a payment that does not cover monthly interest will produce an error. The break-even estimate uses first-month interest savings and is not a guarantee of future savings.

Frequently asked questions

When does refinancing make sense?

Refinancing can make sense when the new rate is lower, the break-even is shorter than the time you plan to stay, and the fees are manageable. A longer term can lower the payment but increase total interest.

What are points?

Points are an upfront fee paid to lower the interest rate. One point equals 1% of the loan amount.

Why is the break-even different from monthly payment savings?

The break-even in this calculator compares upfront costs with interest savings, which can differ from the change in monthly payment, especially when the loan term changes.

Does this include cash-out refinancing?

Yes, you can add a cash-out amount to the new loan. The calculator does not model how the cash is used or any tax effects.

Source

References:

• Consumer Financial Protection Bureau — Refinance
• Consumer Financial Protection Bureau — What is a mortgage refinance?

Disclaimer

This calculator is for informational and planning purposes only. It is not a loan offer or financial advice. Confirm rates, points, fees, and closing costs with the lender.