AW Let’s begin with the mortgage you already have—not the home’s original price.
Step 1 · Current loan
What would it take to keep your mortgage? Your unpaid balance, note rate, and remaining term let us rebuild the principal-and-interest schedule. Your monthly statement is the best place to find them.
Your estimated current principal, interest, and mortgage insurance payment is — .
AW Now let’s rebuild the refinance exactly as the lender proposed it.
Step 2 · New quote
What changes under the new mortgage? A lower rate is only one part of the offer. The new term and mortgage insurance can change the payment just as much.
Proposed term 10 15 20 25 30 years
A fresh 30-year term may lower the payment partly by stretching repayment.
The proposed principal, interest, and mortgage insurance payment is — , a monthly change of — .
AW This is where a low payment can hide an expensive trade.
Step 3 · Refinance costs
What does it cost to replace the loan? Use net lender, appraisal, title, recording, and other transaction charges after lender credits. Leave out prepaid taxes, prepaid insurance, and new escrow funding unless you deliberately want to treat those temporary cash movements as costs.
How will you handle those costs? Pay in cash Add to loan
Financing costs reduces cash due now but increases the new balance and interest.
Your modeled refinance costs are — .
AW The lower payment needs enough time to overcome the transaction cost and balance difference.
Step 4 · Your timeline
How long might you keep the new loan? Think about moving, refinancing again, or paying the mortgage off—not only how long you plan to own the home.
Expected loan-hold period: 7 years
Calculating the result at your selected horizon…
Common questions
What I would want you to understand before refinancing What costs belong in the break-even calculation? Start with the net lender, appraisal, title, settlement, recording, and other transaction charges on the written Loan Estimate after lender credits. Escrow deposits, prepaid interest, prepaid taxes, and prepaid insurance affect cash timing, but they are not always the true price of obtaining the new loan.
Why can the simple break-even and payoff-adjusted crossover disagree? The simple answer divides cash costs by monthly payment savings. The payoff-adjusted answer also checks how much principal remains under each loan. If the new payment falls mainly because you restarted a longer term, the simple answer can look better than the debt position.
Does a lower rate always mean I should refinance? No. The rate, term, costs, mortgage insurance, expected hold period, and your financial goal all matter. A smaller rate reduction may still work on a large balance with low costs, while a larger reduction can fail when costs are high or you expect to move soon.
What is a “no-closing-cost” refinance? The lender may use a higher rate or add costs to the new loan balance. Compare matching Loan Estimates, including lender credits, the new loan amount, total loan costs, payment, and the five-year comparison.
Should I include taxes and homeowners insurance? Usually not in this rate-and-term comparison because you generally owe them with either mortgage. Do compare mortgage insurance when it changes. If your escrow account is refunded after payoff, do not count both the new escrow funding and the refund as permanent costs.
What if I am taking cash out? This calculator intentionally excludes cash-out refinancing. Cash-out changes the debt amount and introduces a separate question about what the borrowed money replaces or accomplishes. Ask for a review rather than forcing that decision into this model.
What if the new payment is higher? A shorter term can raise the payment while reducing long-run interest and debt faster. In that case, simple payment break-even is not meaningful; use the payoff-adjusted timeline and decide whether the higher required payment fits your budget.
Does this include a tax deduction? No. Mortgage-interest and points treatment depends on tax rules and personal circumstances. The calculator does not assume a deduction. Ask a qualified tax professional about your situation.
Is this a loan approval or lender quote? No. It is an educational planning estimate using the numbers you enter. Only a lender can issue a Loan Estimate, approve the refinance, or confirm the final terms and costs.