Calculate break-even point and total savings from refinancing your mortgage with closing costs, new rate, and remaining term comparison.
A lower monthly payment is not automatically a cheaper loan, and this tool exists to make the difference visible. You enter your current balance, rate, and remaining term, then the new rate, term, and closing costs. It recomputes both loan payments with standard amortization math, shows the monthly saving, divides the closing costs by that saving to find the break-even month, and totals the interest each loan would pay over its full life. Users most often misjudge how long the break-even horizon really is, and most miss that resetting the term can erase the interest savings the lower rate creates.
A concrete input and expected output from the current implementation.
Input
Balance: $200,000 | Current rate: 7.0% | Remaining term: 25 years | New rate: 5.5% | New term: 25 years | Closing costs: $4,000
Expected output
New payment: $1,228/month (was $1,414). Monthly saving: $185. Break-even: about 22 months (1 year 10 months). Interest over the remaining life, current loan: $224,065; new loan: $168,454. Interest saved: $55,611, or $51,611 after the $4,000 closing costs.
Both payments come from the amortization formula M = P x r(1+r)^n / ((1+r)^n - 1) with monthly rates 0.00583 and 0.00458 over 300 months. Break-even is $4,000 divided by $185.37, which is 21.6 months; each interest total is (payment x 300) - $200,000. Closing costs are treated as paid upfront.
Each loan is amortized with M = P x r(1+r)^n / ((1+r)^n - 1), where P is the balance, r the annual rate divided by 12, and n the number of remaining monthly payments. The gap between the two payments is your monthly saving. The break-even month is the closing costs divided by that saving: the point at which the cumulative savings finally cover the fees you paid to get the new loan.
Interest paid over a loan's life is (monthly payment x months in term) - principal. The tool computes this for your current loan over its remaining term and for the new loan over its full term; the difference is the gross saving. Because the new term is usually longer than the time you have left, the payment can drop while total interest does not, so the two outputs must be read together.
Compare those four years with the break-even month. With a 22-month break-even you are about $4,900 ahead after 48 months (48 months of roughly $185 savings minus the $4,000 fees), so it can still be worthwhile. If the break-even month exceeds your expected time in the house, the fees outrun the savings and keeping the current loan is the cheaper choice.
Because that $185 repeats 300 times: the amortization totals accrue over the full 25-year term, so a small monthly difference compounds into a large total. That is also why the figure is fragile - it assumes you never pay extra, sell, or refinance again. For decisions within the next few years, watch the break-even month rather than the lifetime total.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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