Mortgage Refinance Calculator

How the calculation works

Both mortgages use fixed monthly amortization: payment = P × r / [1 − (1 + r)^−N]. Horizon net saving = old payments + old balance − new payments − new balance − upfront fees. When fees are financed, they enter the new principal and are not subtracted again. Durable break-even is the first month after which net savings stay nonnegative through the modeled payoff dates.

Worked example

A $120,000 mortgage balance over ten years at zero interest has a $1,000 monthly payment. Refinance to twenty years at zero interest with $3,000 upfront costs: payment falls to $500, but lifetime cost rises $3,000. At the ten-year horizon, $60,000 new debt remains and net savings are still −$3,000.

Assumptions and limitations

Use principal-and-interest payments, excluding escrow. Zero current payment derives a payment from the remaining months; an entered positive payment instead determines its implied payoff. Fees include costs you want to compare. No cash-out amount, prepayment penalty, daily-interest convention, changing rate or tax deduction is supplied automatically.

This model compares borrowing costs and does not recommend a lender or financial decision. Pay attention to outstanding debt when comparing loans with different terms. Simple fees divided by monthly saving can give a misleading break-even where the savings later reverse; the displayed durable test covers the full remaining modeled period. Results are undiscounted nominal currency.

Sources and editorial responsibility

Maintained by Renvoro Pty Ltd. These mathematical estimates do not provide financial, tax, legal or investment advice.

• Federal Reserve: refinance costs and considerations
• CFPB: mortgage and borrowing definitions