Refinance break-even calculator
How long a lower payment takes to cover what the refinance cost, and what the new loan does to the total interest.
From a lender's quote.
Set it to the years left to keep the same finish date.
Paid in cash. Adding them to the loan raises the balance instead.
The costs are covered by
Month 23
$264.79 a month lower · 3 years more of payments than the loan you have
- Payment now
- $2,063.44
- New payment
- $1,798.65
- Interest left now
- $368,556
- Interest on the new loan
- $347,515
- Over the whole loan, with costs
- -$15,042
The month is the closing costs divided by the monthly saving. A lower payment can still cost more over the whole loan if the new term is longer, which is why both interest totals are shown; a negative last figure is a saving. It assumes fixed rates, costs paid in cash and both loans kept to the end. Tax, and what the cash could have earned, are left out. It does not say whether to refinance.
Questions
- Why can a lower payment cost more overall?
- Because a new loan usually starts a new term. If you have 27 years left and take a new 30-year loan, the payment falls partly because you are paying for three more years. Set the new term to the years you have left to compare like with like.
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