Calculator
When a refinance pays back
Does this refinance actually leave me better off?
Two numbers decide a refinance: how much the payment falls, and how much it costs to make that happen. A third decides whether it was a good idea — whether the new loan runs past the end of the old one.
The loan you have
The loan on offer
—
Interest, over each loan’s own life
Net of costs, the refinance pays —— in interest. Cash at closing: —. New loan amount: —.
What this page assumes, and where it comes from
Questions this raises
A lower payment is a saving, isn’t it?
Not necessarily. If you are 6 years into a 30-year loan and refinance into a new 30-year loan, the payment falls partly because you just gave yourself 6 extra years to pay. This page flags that explicitly and shows the interest still to pay on each loan over its own remaining life, so you can see the trade rather than only the monthly figure.
What is break-even, exactly?
The month in which the accumulated monthly saving first covers what you paid at closing. Before that month you are behind; after it you are ahead. If you expect to sell or refinance again before break-even, the deal costs you money.
Should I roll the costs into the loan?
It removes the cash at closing, so break-even is immediate in the narrow sense. But you then borrow the costs and pay interest on them for the life of the loan. The calculator will show you both; there is no universally right answer.