Payment change
Compare current principal and interest with the new estimated principal and interest.
Refinance math
Refinance break-even calculator: compare payment savings with total cost
A refinance can lower a monthly payment while increasing total interest, resetting the payoff clock, or adding cash-out debt secured by the home. This calculator makes the monthly-payment and total-interest tradeoffs visible before you treat a refinance as savings.
By CashTalks ·
Break-even
Estimate when monthly payment savings catch up with closing costs and points.
Total cost
Separate monthly-payment savings from interest over the remaining and new loan terms.
Refinance break-even calculator
Compare monthly savings with total-interest tradeoffs
Enter your current mortgage and a possible new loan. The calculator estimates principal-and-interest payment change, closing and points cost, break-even month, and remaining-interest comparison under simplified fixed-rate assumptions.
Current loan
$
%
$
New loan scenario
%
$
%
$
Caution
- The new term is longer than the remaining term, so a lower monthly payment can still mean more total interest.
- This scenario can lower the monthly payment while increasing estimated total interest plus upfront costs.
Educational assumptions
- Principal and interest only; taxes, homeowners insurance, mortgage insurance, and escrow changes are excluded.
- Closing costs and points are treated as paid up front, not rolled into the new loan.
- Cash-out is added to the new loan balance and remains secured by the home.
- Estimates do not include underwriting, credit approval, rate locks, prepayment penalties, or final closing-table figures.
Break-even answers only one question
Break-even estimates when monthly payment savings recover upfront costs. It does not prove the refinance is better overall, because the new term, cash-out amount, escrow changes, and total interest can change the outcome.
If the refinance lowers the payment by stretching the loan back to a longer term, the monthly result and total-interest result can point in different directions.
Cash-out changes the risk
Cash-out refinancing replaces the current mortgage with a larger mortgage and gives some of the difference as cash. That can reduce home equity and increase the amount secured by the home.
When home equity is used to pay other debts, the payment may look simpler, but missed mortgage payments can put the home at risk.
Ask for the same scenario from each lender
To compare refinance offers, request the same loan amount, term, points, and cash-out amount where possible. Then compare Loan Estimates, not only verbal quotes.
Rate locks, lender credits, escrow setup, prepaids, and third-party services can change the final cash needed at closing.
FAQ
Is a lower payment always a savings?
No. A lower monthly payment can come from a lower rate, a longer term, fewer escrowed costs, cash due at closing, or a different loan structure. Total interest and upfront costs need a separate comparison.
Should closing costs be rolled into the new loan?
This calculator treats them as paid up front so break-even is easier to see. If costs are financed, the new loan balance, payment, interest, and equity picture change.
Official Resources
- CFPB Your Home Loan Toolkit
CFPB step-by-step mortgage toolkit for comparing loan choices, closing costs, and homebuying responsibilities.
- CFPB mortgage costs
CFPB explanation of lender costs, points, third-party closing costs, government fees, prepaid expenses, and deposits.
- CFPB points and lender credits
CFPB guidance on discount points, lender credits, upfront costs, monthly payment tradeoffs, and time-horizon comparisons.
- Fannie Mae refinance options
Fannie Mae overview of traditional refinance, cash-out refinance, equity, term, payment, and total-interest tradeoffs.
- Freddie Mac refinance options
Freddie Mac overview of no-cash-out and cash-out refinance choices, costs, rates, term changes, and lender comparison.