How this refinance comparison works

One starting date

The current loan and the new loan are both measured from the same date. The current path uses the balance, rate, and remaining term you enter, including leftover months. The new path uses the rate, term, and costs you enter. Principal and interest come from the mortgage calculator’s fixed-rate schedule.

Taxes, homeowners insurance, HOA dues, and other housing costs are shown in the monthly housing payment for both loans. They are left out of the economic difference, including after one loan is paid off, because those bills continue either way.

Two break-even measures

Simple break-even divides unrecovered cash financing charges by the monthly housing-payment reduction. Escrow deposits and prepaid taxes and insurance are not treated as lost money in that division. If the new payment is not lower, simple break-even is reported as not achieved.

Economic break-even compares principal, interest, mortgage insurance, and the remaining balance of each loan. Cash financing charges are included. Financed charges stay in the new balance, so rolling them into the loan does not make them disappear. A lender credit reduces those cash charges first and then the amount financed. Cash-out proceeds are added back because you received that money. Cash you apply to principal is money you paid, so it is not counted as a gain. An expected escrow refund is added only on or after its assumed month, and it is not subtracted from the cash due at closing.

A lower payment can cost more

A longer term can reduce the monthly payment and increase total interest. The interest totals on the page cover each loan’s own term. They are not an equal-period comparison when the terms differ. The horizon table stops a loan’s payments when that loan reaches a zero balance.

Cash-out increases the new loan. The proceeds are shown as money you receive, not as savings from the rate. None of these figures is a lender approval or a promise that refinancing will leave you ahead.

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Related guides

• How mortgage payments are calculated
• What affects monthly mortgage costs?
• How down payments affect mortgages

Read the methodology

Written to explain how this site’s calculators work. Not a review by a licensed mortgage professional, and not a recommendation to borrow. These notes are not financial, tax, or legal advice.