Mortgage Refinance True Breakeven & Term Reset Calculator

What this calculator does

This calculator compares keeping a current fixed-rate mortgage with replacing it through a refinance. It reports two breakevens, one measured in monthly payments and one in interest, along with how many years the new term adds or removes and the difference in total remaining interest between the two paths.

How the math works

Both loans use the standard fixed-rate payment formula. The current loan is amortized over its remaining term (original term minus years already paid). The new loan is amortized over the term selected, on the current balance plus the closing costs when they are rolled in.

• Cash-flow breakeven = closing costs ÷ (current payment − new payment).
• Interest breakeven = the first month in which the interest avoided on the current loan, summed month by month, reaches the closing costs.
• Lifetime interest difference = remaining interest on the current loan − (total interest on the new loan + closing costs).

The planned-stay input is compared with the interest breakeven to label the result; it does not change any figure. Rates are fixed for both loans, and property taxes, insurance, mortgage insurance and the time value of money are left out.

Worked example

The defaults describe a $420,000 balance at 7.125% on a 30-year loan with 4 years paid, refinanced into a new 30-year loan at 5.625% with $6,500 of closing costs paid in cash.

1. Current path: 26 years left at $2,960.66 a month.
2. New loan: $2,417.76 a month, $542.91 less.
3. Cash-flow breakeven: $6,500 ÷ $542.91 = 12.0 months. Interest breakeven: month 13, slightly later, because part of the lower payment comes from spreading repayment over four more years rather than from lower interest.
4. Term and lifetime interest: the new loan runs 4.0 years (48 payments) longer, and over the full terms it costs $46,835 less in interest and closing costs combined.

How to read the result

The two breakevens answer different questions. The cash-flow figure counts the months until lower payments repay the closing costs; the interest figure counts the months until lower interest does. When the new term is longer than the years left, the interest figure is the stricter of the two. A breakeven later than the planned stay means the closing costs are not recovered before a sale or another refinance ends the loan.

At the defaults the rate spread dominates every other input. Raising the new rate by a tenth, from 5.625% to about 6.19%, moves the interest breakeven from month 13 to month 21 and turns $46,835 less lifetime interest into $7,600 more. Raising the closing costs by a tenth adds one month. The new term choice reshapes the lifetime figure most: a 20-year term shows $216,701 less interest, against $46,835 for the 30-year term.

Sources

• Consumer Financial Protection Bureau, mortgage resources — the federal disclosure rules (TILA and RESPA, Regulation Z) that govern refinance terms and costs.
• CFPB, What fees or charges are paid when closing on a mortgage — common closing costs, and how lender credits are paid for through a larger loan or a higher rate.
• CFPB, What is a Closing Disclosure? — the form that states a refinance's final rate, payment and closing costs.
• CFPB, Understand the different kinds of loans available — fixed-rate terms and loan types.

The payment and amortization figures are computed by the standard fixed-rate formula from the inputs above; no external rate data is used. Sources checked October 2026.

Common mistakes

• Using only the cash-flow breakeven when the term gets longer. Part of a lower payment can come from stretching repayment, which is not a saving; the interest breakeven separates the two.
• Treating a no-closing-cost refinance as free. The CFPB notes that lender credits are usually paid for by a larger loan amount or a higher rate. Entering the higher rate here shows how much of the saving it absorbs.
• Comparing payments across different terms. A 15-year loan at a lower rate can raise the monthly payment while cutting lifetime interest sharply; at the defaults, the 15-year option costs $499.01 more a month.
• Leaving rolled-in costs out of the comparison. Costs added to the balance are repaid with interest over the full term, and they belong in the lifetime figure.
• Ignoring the planned stay. A refinance that breaks even in month 21 recovers nothing for a borrower who sells in month 18.

Frequently Asked Questions

Related

• Mortgage Amortization Calculator
• Fed Rate Cut Mortgage Refinance Savings Calculator
• Mortgage Recast vs. Refinance Calculator
• Mortgage Discount Points Breakeven Calculator
• Article: Fed rate cuts and the mortgage refinance window

Educational estimate, not advice. Figures are illustrative; consult a professional for your situation.