Compare your current mortgage with a lender quote to calculate both cash-flow and economic break-even. Estimate net savings over the period you expect to keep the loan before moving, paying it off, or refinancing again.
Use the note interest rate, not APR. APR includes certain fees; entering APR and fees here would count some costs twice.
Property taxes and homeowners insurance are excluded because refinancing normally does not change them. Include only a genuine expected change separately in your own decision.
Cash-flow asks when upfront costs are recovered by lower payments. Economic break-even also compares cumulative payments and both remaining balances month by month.
Enter your quote and calculate.
Change the new-loan quote above, calculate it, then save it into a comparison slot. Try a higher-rate lender-credit offer, a points offer, and a shorter term.
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Savings include cumulative payments, upfront transaction cash flow, and remaining balances. The horizontal zero line separates ahead from behind.
A borrower owes $350,000 at 6.75% with 26 years remaining. The calculated current P&I payment is about $2,383. A new $353,500, 30-year loan at 5.75% has P&I of about $2,063. With $3,500 of loan costs financed, cash paid upfront is $0 and the payment is about $320 lower.
The simple cash-flow calculation is $0 upfront costs ÷ about $320 monthly savings, so cash-flow break-even is immediate. The economic comparison is stricter: every month it adds each loan’s actual payments and remaining principal, so the financed $3,500 is counted through the higher new balance and its interest. Economic break-even occurs around month 13, and after five years the refinance is ahead by about $11,826. Use the live panel above for exact results, which may differ slightly with rounding.
Use economic savings at your realistic holding date as the core decision measure. Cash-flow break-even answers a narrower budgeting question. A quote can lower the payment yet leave you with a larger balance because a new long term pays principal more slowly.
Include origination, appraisal, title, settlement, and other lender/third-party loan costs; add points and a real prepayment penalty; subtract lender credits. The CFPB’s Loan Estimate explainer identifies these fields.
Paying upfront creates a cash cost to recover. Financing that same cost reduces cash due but increases principal, interest, and usually the payment. The economic calculation avoids counting it both ways.
Points exchange more upfront cost for a lower rate; lender credits generally exchange a higher rate for less upfront cost. Compare the same lender and loan type over several realistic timeframes, as explained by the CFPB points and lender credits guide.
Restarting at 30 years can lower the required payment while slowing principal reduction. Check the balance at your holding date, payoff date, total interest, and a shorter-term quote—not only monthly savings.
Use the economic measure for cash-out loans, cash-in transactions, financed costs, different terms, or a higher-payment shorter loan. Payment break-even alone does not value the difference in principal still owed.
Mortgage insurance can genuinely change in an FHA-to-conventional or PMI-removal refinance, so it is included. Taxes and homeowners insurance normally follow the property, not the lender. The CFPB comparison guide likewise cautions against treating lower tax or insurance estimates as a better loan.
Review scope: financial-model logic, month-by-month amortization, input reconciliation, accessibility, and representative calculation tests. The reviewer is a technical calculation reviewer, not a lender, mortgage broker, tax professional, or financial adviser.
Each loan is amortized monthly. Interest is opening balance × annual note rate ÷ 12; principal is the scheduled P&I payment minus interest, capped at the remaining balance. Economic savings at month m equals current-loan cumulative payments plus current balance, minus new-loan cumulative payments, new balance, and net transaction cash flow. The first month that amount is zero or positive is economic break-even.
Included: scheduled principal and interest, level monthly mortgage insurance, loan costs, points, lender credits, financed costs, prepayment penalty, cash-out/cash-in transaction flow, and remaining balances. Excluded: property taxes, homeowners insurance, escrow timing/refunds, daily interest and exact payoff fees, tax deductions, investment opportunity cost, inflation, adjustable-rate changes, future mortgage-insurance cancellation, extra payments, eligibility, underwriting, and lender-specific rules.
The calculator assumes fixed rates, monthly payments, no delinquency, and that entered mortgage insurance stays level until payoff. Results are educational estimates; confirm the final Closing Disclosure, payoff quote, tax effects, and eligibility with qualified professionals. CFPB references: what a Loan Estimate contains, interactive field definitions, and how to compare offers.
Cash-flow break-even is net costs paid upfront divided by monthly payment savings. Economic break-even is the first month when the new loan's cumulative payments, transaction cash flow, and remaining balance are lower than the same combined amount for the current loan.
Include lender and third-party loan costs, discount points, and any prepayment penalty; subtract lender credits. Identify the portion financed into the new balance so it is not also treated as cash paid upfront.
Usually no. Prepaid property taxes, homeowners insurance, prepaid interest, and initial escrow deposits are timing items rather than lender costs, and an old escrow account may be refunded after payoff.
Financed costs reduce cash due at closing but increase the new balance, payment, and interest. This calculator includes them in the new amortization and excludes them from costs treated as paid upfront.
No. A lender may cover costs with credits in exchange for a higher interest rate, or costs may be added to the loan balance, so compare payment and cumulative cost over the time you expect to keep the loan.
Discount points are an upfront charge commonly exchanged for a lower rate; one point equals one percent of the loan amount. Lender credits reduce upfront costs and commonly come with a higher rate.
Enter current and new monthly mortgage insurance separately. Removing PMI or FHA mortgage insurance can create savings even when the principal-and-interest payment changes very little.
There is no cash-flow break-even from monthly savings, but a shorter term or faster principal reduction can still create an economic break-even. Compare cumulative costs and remaining balances rather than payment alone.
You will generally not have recovered the modeled refinance costs by that date. Use your earliest realistic move or refinance date as the holding period and compare the estimated net result then.
