Mortgage Refinance Calculator

What this calculator does

Refinancing changes three things at once: the rate you pay, the number of years you pay it over, and how much you owe. A lower payment can come from any of them, and only one is a saving. This page separates them.

It also works out when you are genuinely ahead, using the cash you hand over, what you still owe, and what you receive — rather than dividing the cost by a payment drop, which flatters a refinance and falls apart entirely once you take money out.

• What fits under the 80% ceiling once any capitalized costs are counted
• Your new payment, split between the rate, the amortization and the extra borrowing
• Lifetime interest with the same three-way split, summing exactly to the change
• The month you actually come out ahead — and the same figure without the cash-out
• What a refinance ends for good: insured pricing, and your ceiling from here

Three things change at once

Almost every refinance calculator reports one number for lifetime interest and attributes any rise to the amortization reset. That is usually wrong, and it is wrong in a way that misleads.

Take the figures this page opens with: a $520,000 balance at 5.29% with 22 years left, refinanced to 4.49% over 25 years while taking out $50,000 and adding $11,300 of costs. Lifetime interest rises by $26,414. But the lower rate *saves* $60,312. The amortization reset adds $46,345. Borrowing $61,300 more adds $40,381. Blaming the reset for the whole $26,414 understates it and hides the fact that most of the pressure comes from the money being taken out.

That distinction matters because the two have different remedies. If the reset is the problem, set the new amortization to the years you have left and it disappears. If the borrowing is the problem, the question is whether what the money is for justifies it — and often it does.

• A lower rate is the only change that saves money on its own
• A longer amortization defers interest; it does not reduce it
• Borrowing more costs more, which is not a flaw if the money is needed
• The three effects here sum exactly to the total change, in that order
• Matching the new amortization to the years left removes the reset entirely

Why the break-even here is longer than elsewhere

The common method divides the cost of refinancing by the drop in your monthly payment. On the numbers above that gives 107 months. This page says 275, and the difference is not conservatism.

A payment drop is not a saving. Most of the drop after a refinance comes from spreading the same debt over more years, which defers principal rather than avoiding interest — you pay less each month and owe more later. Treating that as money saved counts something twice.

What this page measures instead is your actual position: the cash you have paid, plus what you still owe, less what you received. At month zero that equals the penalty and fees exactly, whether or not you took money out — which is the check that the cash-out is being netted properly rather than quietly ignored. Then it finds the month the figure crosses zero. On a pure rate-and-term refinance with no cash-out, the same numbers break even at 41 months rather than 30.

• Dividing cost by payment drop treats deferred principal as saved money
• Position = cash paid + what you still owe − what you received
• At month zero that is exactly the penalty and fees, cash-out or not
• Break-even is the month that figure reaches zero
• The page also shows the break-even without the cash-out, which is the fair test of the rate

The 80% ceiling covers everything you add

Refinancing is uninsured lending, so the ceiling is 80% of your home’s value — and it applies to the whole new mortgage, including any penalty and fees you roll into it. Capping the money you take out at your raw equity and then adding the costs on top produces a mortgage no lender will advance.

On a $900,000 home with $520,000 owing there is $200,000 of equity under the ceiling. Capitalize $11,300 of costs and only $188,700 is left for you. Pay those costs in cash instead and the full $200,000 stays available — which is worth knowing if the amount you need is close to the limit.

Neither choice is free. Adding the costs to the mortgage means paying interest on them for the whole amortization; paying cash means finding the money at closing. The page prices both the same way so the comparison is like for like.

• The ceiling is 80% of value and applies to the entire new mortgage
• Capitalized penalty and fees consume that room dollar for dollar
• Paying costs in cash frees the room for the money you actually want
• Capitalizing means paying interest on the costs for the full amortization
• A balance already above 80% cannot be refinanced at all on standard terms

What a refinance ends

If your current mortgage is insured — you bought with less than 20% down — refinancing ends that insurance and the pricing benefit that came with it. Insured mortgages are cheaper to fund, and lenders price them accordingly, so the rate you are quoted on a refinance is not the rate you would be quoted at renewal.

It also caps you at 80% of value from that point on, for this refinance and every future one, aside from a narrow secondary-suite program. And it is underwritten in full: current stress test, current ratios, current income documentation. A renewal with your existing lender requires none of that.

That last point is why renewing and taking a separate line of credit is often the better route when reaching some equity is the only reason to refinance. It leaves the existing mortgage and its rate alone. This page does not model that alternative, but it is worth pricing before committing.

• Any existing default insurance and its pricing benefit are lost permanently
• Your ceiling is 80% of value from that point on
• A refinance is requalified in full, unlike a renewal with your current lender
• Renewing plus a HELOC leaves your existing rate untouched
• Breaking mid-term also triggers a prepayment charge, which is usually the largest cost

Using your results well

Start by getting the penalty right. It is normally the largest single cost and the one most often guessed at, and a figure that is out by a few thousand dollars moves the break-even by years. A payout statement from your lender is the only authoritative source.

Then decide what you are actually doing. If you need the money, the lifetime interest rise is a price rather than a mistake — clearing a credit card at 20% with a mortgage at 4.49% is a good trade even though total mortgage interest goes up. If you are only chasing a rate, set the new amortization to the years you have left, look at the break-even without any cash-out, and judge it on that.

And price the alternatives before committing. A renewal plus a line of credit, or a second mortgage, may reach the same money without ending your insured pricing or resetting the clock.

• Get the penalty from a payout statement, not an estimate
• Match the new amortization to the years remaining unless you need the payment relief
• Judge a rate refinance on the break-even without cash-out
• Judge a cash-out refinance on what the money is for, not on lifetime interest alone
• Price a renewal plus a HELOC before assuming a refinance is the answer