Refinance calculator: would a new loan save you money?

How to use this calculator

Enter the loan you have: the original amount, its rate, the month and year of the first payment, and the original term. From that the calculator estimates the balance you owe today, assuming every payment was made on schedule. Then enter the loan you are considering: the amount, the rate you have been quoted or expect, the term, and the closing costs you would pay in cash. The comparison appears once every entry is valid; nothing is assumed until then.

• New loan amount. Start with the estimated balance shown in the results. A larger amount means cash out or costs financed into the loan; a smaller one means cash in.
• Closing costs paid in cash. Only what you would bring to closing. Costs rolled into the loan belong in the new loan amount instead.
• The new term. Resetting to 30 years lowers the payment but can add years of interest; the total cost line shows the trade.

How the comparison works

The current loan's remaining principal-and-interest payments are compared with every proposed principal-and-interest payment plus entered cash closing costs. These are scheduled outflows over each loan's remaining term, not a net-worth calculation. When the principals differ, cash received or invested must also be considered before calling a difference savings. The monthly figure is the change in principal and interest only; taxes, insurance and unentered costs are excluded.

When the new loan amount matches the estimated balance, the calculator also reports cash-cost recovery: how many months of the lower payment it takes to earn back the closing costs. When the amounts differ by more than a small margin the comparison is not like-for-like, and a simple break-even would mislead, so it is withheld and the reason is stated. Recovery is also withheld if it would take longer than the period before either loan ends; the initial monthly difference cannot continue beyond that point.

The balance is estimated as of the first of the current month, so a comparison run on the 3rd and on the 28th of the same month give the same figures; the next payment moves it. A servicer's payoff statement is the exact number.

What this estimate leaves out

Rate-and-term and cash-out refinances price differently, and both depend on your credit, the property's current value, the loan-to-value ratio after the refinance, the program, points and lender credits. Mortgage insurance may be added or removed depending on the new loan-to-value ratio. Prepaid interest, the escrow deposit, and any prepayment penalty on the current loan change the cash needed at closing. The refinance loan options page describes the programs; the refinance guide walks through the decision.

Reading the result

A lower payment and a lower total cost do not always arrive together. Resetting a loan with ten years left to a new 30-year term almost always lowers the payment and raises the total interest. Look at the payoff dates and the total cost line before the monthly figure. If you plan to move or refinance again within a few years, the recovery period matters more than the lifetime total.

Questions people ask