Question 1

How do I use the Refinance Break-Even Calculator?

Accepted Answer

Enter your current loan balance, your current interest rate, and how many years remain on the loan. Then enter the new rate and new term you are considering, and the closing costs for the refinance. Click calculate to see your current and new monthly payments, monthly savings, and how many months it takes to break even.

Question 2

What if my new payment is higher than my current payment?

Accepted Answer

If you shorten the loan term (e.g. refinance from 30 years to 15 years), the new payment may be higher even at a lower rate. In that case monthly “savings” would be negative, and the calculator shows zero for break-even months. You would not recover closing costs through payment savings; the benefit of refinancing might be less total interest over time, not a lower payment.

Question 3

Does this include closing costs rolled into the loan?

Accepted Answer

This calculator treats closing costs as an upfront cash outlay. If you roll closing costs into the new loan balance, your actual new payment would be slightly higher (because the principal is larger). For a precise comparison, you could add the closing costs to the current balance when estimating the new payment, or use the calculator as a conservative estimate.

Question 4

What counts as closing costs?

Accepted Answer

Closing costs typically include lender fees, appraisal, title insurance, and other settlement charges. Enter the total out-of-pocket cost you expect to pay at closing. If you receive a lender credit that offsets some costs, use the net amount you will pay.

Question 5

How does this relate to the Mortgage Payment Calculator?

Accepted Answer

The Mortgage Payment Calculator shows the monthly payment for a given home price, down payment, rate, and term. Use it to see the payment on a specific loan. The Refinance Break-Even Calculator compares your current payment to a new one and tells you how long it takes to recoup closing costs. Both use the same underlying PMT formula.