Using the Refinance Calculator
Use the months left on the current loan, not its original term. Otherwise the old loan can appear much more expensive than the amount actually remaining to be paid.
Worked example
Use the example inputs below to reproduce this result. These are the form's starting values, not recommended targets. Changing your inputs updates your result above; this worked example stays fixed for comparison. Results are rounded for display.
Example inputs
- Outstanding principal
- 200000
- Current annual rate (%)
- 7
- Remaining months
- 300
- New annual rate (%)
- 5
- New term (months)
- 240
- Cash closing costs
- 4000
Example result
- Current monthly payment
- 1,413.56
- New monthly payment
- 1,319.91
- Monthly savings
- 93.65
- Simple break-even (months)
- 42.71
- Remaining total savings
- 103,288.76
Method and assumptions
Closing costs paid in cash. Simple break-even ignores changing principal balances and opportunity cost.
Compare the whole borrowing commitment
When comparing loan scenarios, change one assumption at a time. First compare terms at the same rate and balance, then compare rates over the same term. This makes it easier to see why the monthly payment changes. Keep any upfront costs alongside the result so that a lower installment does not hide a more expensive agreement.
Common question
Why can a refinance lower payments but cost more overall?
Starting a longer term spreads payments over more months. The smaller installment can still add up to more interest and fees than continuing the current loan.
Guide updated .