Decide if refinancing is worth it by quantifying costs, savings, and time-to-benefit.
Overview
Refinancing can lower rate, change term, or both, but fees matter.
A lower payment is not automatically a better deal if timeline extends too much.
This calculator focuses on net savings and break-even period.
It is most useful when matched with expected time you will keep the loan.
Steps
Input existing balance, rate, and remaining term.
Add proposed rate and new term.
Include all refinance-related fees.
Compare old and new payment amounts.
Estimate months needed to recover refinance costs.
Math
Break-even Months = Refinance Costs / Monthly Savings
Break-even analysis shows how long payment savings take to offset upfront refinance expenses.
Worked cases
BE = 3,600 / 180
Break-even is 20 months.
BE = 4,200 / 70
Break-even is 60 months; may not suit short tenure.
Recompute payment and total interest.
Payment may rise while lifetime interest still falls.
Why use this
Questions