Explain it like I'm 12
The refinance calculator compares the current payment with the proposed refinance payment, then divides upfront costs by monthly savings to estimate break-even time.
Finance
Refinance Calculator
Compare an existing loan with a refinance offer using payment, monthly saving, closing costs and break-even month.
Calculator
Working calculator
Live result19 months to break evenOld payment 3,038.43; new payment 2,844.59; monthly saving 193.84. Old remaining interest 461,529.67; new interest plus costs 406,877.41.
Formula used
Monthly payment = P × r ÷ (1 − (1 + r)^−n). Monthly saving = old payment − new payment. Break-even months = closing costs ÷ monthly saving.
This is the method behind the answer, so the result can be checked rather than simply trusted.Visual grid
This number is one point on a larger pattern
Refinance is not just a final answer. It is a step on a line: before and after, input and output, assumption and result.
Micro-timehours, minutes, shiftsHuman scaledays, weeks, projectsMacro-timemonths, years, calendars
InputFormulaResult
19 months to break evenCalculationTime keeps the path visible: the input, the method and the final number belong together.
CalculationTime
Refinance Calculation Report
19 months to break evenOld payment 3,038.43; new payment 2,844.59; monthly saving 193.84. Old remaining interest 461,529.67; new interest plus costs 406,877.41.
Inputs
- Current loan balance
- 450,000 $
- Current annual rate
- 6.5 %
- Current years left
- 25 years
- New annual rate
- 5.8 %
- New term
- 25 years
- Refinance costs
- 3,500 $
Method
Monthly payment = P × r ÷ (1 − (1 + r)^−n). Monthly saving = old payment − new payment. Break-even months = closing costs ÷ monthly saving.
- A $450,000 balance at 6.5% over 25 years compared with 5.8% over 25 years saves about $202/month before costs. With $3,500 costs, break-even is about 17 months.
Assumptions
- Rates are fixed for the comparison period.
- Closing costs are paid upfront and not rolled into the new loan unless entered in the balance.
- Taxes, insurance, offset accounts and early-exit fees are outside the estimate.
Notes
Use this space on the printed report for client, supplier, classroom, job-location, measurement, quote or approval notes.
Source references
- Consumer Financial Protection Bureau - Mortgages — consumer mortgage education reference
Formula
Monthly payment = P × r ÷ (1 − (1 + r)^−n). Monthly saving = old payment − new payment. Break-even months = closing costs ÷ monthly saving.
Worked example
A $450,000 balance at 6.5% over 25 years compared with 5.8% over 25 years saves about $202/month before costs. With $3,500 costs, break-even is about 17 months.
Professional note
Master’s Tip: compare both payment saving and total interest. A longer new term can lower payment while increasing lifetime cost.
Regional and unit assumptions
Standard amortising-loan mathematics. Treat as financial education, not personal financial advice.
Assumptions and limitations
- Rates are fixed for the comparison period.
- Closing costs are paid upfront and not rolled into the new loan unless entered in the balance.
- Taxes, insurance, offset accounts and early-exit fees are outside the estimate.
Methodology & Accuracy
How this calculator is checked
CalculationTime pages are built around visible arithmetic: the formula, assumptions, worked example and practical limitations are shown so the result can be checked rather than simply trusted.
Formula used
Monthly payment = P × r ÷ (1 − (1 + r)^−n). Monthly saving = old payment − new payment. Break-even months = closing costs ÷ monthly saving.
Standard or basis
Standard amortising-loan mathematics. Treat as financial education, not personal financial advice.
Where a calculator follows a named legal, trade or industry standard, that standard is cited visibly. Otherwise the page uses transparent general arithmetic and states its limits.Master's Tip
Master’s Tip: compare both payment saving and total interest. A longer new term can lower payment while increasing lifetime cost.
Related calculators
Questions
What is refinance break-even?
It is the number of months needed for monthly savings to recover the refinance costs.
Can a refinance reduce payment but cost more?
Yes. Extending the loan term can lower the monthly payment while increasing total interest over time.