What this refinance comparison measures
The calculator builds two fixed-rate monthly amortization paths. For each path it tracks scheduled payments, interest, principal, and remaining balance. At the selected horizon, payoff-equivalent cost equals cumulative modeled payments plus the remaining loan balance, with cash-paid refinance costs added to the refinance path.
Why remaining balance matters
A lower monthly payment can result from a lower rate, a longer term, or both. Extending the term may leave a larger balance at the horizon. Comparing only payment savings can therefore make a refinance appear better even when less principal has been repaid.
Cash costs and financed costs
Cash-paid closing costs are counted immediately. Financed costs increase the new principal, so they affect payment, interest, and remaining balance. The economic break-even month is the first month when the refinance path’s cumulative payments plus remaining balance and any cash costs are no greater than the equivalent current-loan amount.
Important exclusions
The model excludes taxes, insurance, escrow changes, points not included in the entered costs, prepayment penalties, appraisal differences, cash out, mortgage insurance changes, tax effects, daily-interest conventions, skipped-payment timing, and investment opportunity cost. Actual payoff figures can include accrued interest and fees.
Use the same evidence for both paths
Enter the current principal balance—not the original loan—and its remaining term. Enter a new rate and costs from a dated scenario, then test shorter and longer horizons. Inspect each loan separately with the Mortgage Amortization Calculator and read the detailed refinance guide.
This is an educational estimate, not a refinance recommendation, loan offer, approval, or mortgage, investment, tax, legal, or financial advice. Verify official payoff statements, loan estimates, APR, points, fees, term, prepayment rules, escrow, insurance, taxes, eligibility, and appropriate professional guidance.