Interactive real estate analysis

Refinance Calculator

Compare a new loan with keeping the current mortgage.

What refinancing measures

Refinancing replaces the current mortgage with a new one. It can reduce interest, change repayment length or release equity, but fees and a reset amortization schedule can offset a lower payment.

How to Use This Calculator

Enter the current balance, rate, payment and remaining term.
Add the proposed rate, term and all refinance costs.
Compare at the date you realistically expect to sell or refinance again.

Run Your Numbers

Enter your assumptions below. The calculator provides educational estimates; confirm inputs for your property and financing.

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Understand the numbers

Formulas and Assumptions

This guide explains the core calculation methods. The widget’s detailed assumptions and schedules govern its displayed results.

Monthly payment savings = old payment − new payment
Simple break-even months = cash refinance costs ÷ positive monthly savings
Net-worth benefit at comparison date = cumulative payment savings − upfront cash costs + old remaining balance − new remaining balance

How to Interpret the Results

Use the same comparison date. Simple break-even ignores loan balance differences and the time value of money. Financed closing costs increase the new balance and should not also be counted as upfront cash costs. A lower payment can result from a longer term and can increase lifetime interest.

Use consistent time periods and enter percentages in the format requested by each field. Test conservative assumptions as well as your expected case. Estimates are not a lending commitment or individualized financial, legal or tax advice.

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Detailed calculator guide

Detailed Methodology and Model Assumptions

Cash-Out and Financed Closing Costs

When closing costs are a percentage c of the new loan and are financed, solve new principal = (old balance + cash-out + any fixed financed costs) ÷ (1 − c), where the fee definition calls for that treatment. The percentage must be below 100%.

At the comparison month, net benefit = cumulative payment savings − cash closing costs + old remaining balance − new remaining balance + cash received at closing. Cash-out must be included as an asset received, while its repayment remains in the new balance.

Why Lifetime Interest Can Mislead

Old remaining interest = old payment × remaining scheduled months − current balance. New scheduled interest = new payment × new scheduled months − new principal. Use actual amortization if extra payments or nonstandard terms apply.

These totals span different periods if the loan terms differ. Review both the date you expect to leave and the full-term totals. An adjustable or interest-only product needs additional assumptions beyond a fixed-rate amortizing comparison.

Worked Example

Hypothetical illustration: these figures are separate from the live calculator inputs.

With $4,000 of upfront refinance costs and $200 of monthly payment savings, simple break-even is 20 months. After three years, payment savings are $7,200 and the simple net is $3,200. If the new loan still owes $5,000 more than the old-loan alternative at that point, the balance-adjusted benefit is negative $1,800 before other effects.

When does a refinance pay?

Look for a favorable cost comparison over your expected holding period, including the balance remaining on each loan. A shorter payoff goal can require a higher payment even when the rate improves.

Rules of Thumb, and Their Limits

The “one percentage point” rule ignores loan size, fees and the holding period. Monthly savings alone can hide the cost of extending repayment.

Frequently Asked Questions

Should financed fees count as cash paid now?

No. Include them in the new balance and avoid counting the same amount again as an upfront cash cost.

Does a lower rate guarantee savings?

No. Fees and repayment length can offset the rate reduction.

Massachusetts and Property-Specific Considerations

Use the municipality’s actual assessed taxes and the property’s current insurance and association costs. Local rent evidence, building condition and the transaction’s legal use matter more than a statewide average. Review current lender or tax requirements where applicable.

Explore Massachusetts investment guides · Use the due diligence checklists · Compare other calculators

Simple Break-Even Sensitivity

Hypothetical comparison
Monthly payment savings	Upfront costs	Simple break-even
$100	$4,000	40.0 months
$200	$4,000	20.0 months
$300	$4,000	13.3 months

Simple break-even ignores the remaining balance and differences in loan term. Use it as an early filter. Review balance-adjusted benefit at your expected sale date before deciding that a payment reduction is a saving.

Use the Comparison in Your Decision

Change one assumption at a time in the calculator, record the result and compare it with your base case. Then combine adverse assumptions to see whether the plan still fits your cash reserves and objectives. A useful scenario explains what must remain true for the transaction to work.