Enrichment · Life Skills · Home

When the closing
costs come back,
and whether they do.

Type your current mortgage and the offer. The calculator works out both payments, the month the savings cover the closing costs, and a fuller year-by-year comparison that counts what you would still owe.

Check a refinanceWhat you get

The refinance calculator

The worked example is made up: a $285,000 balance at 7.25% with 27 years left, an offer at 6.25% for 30 years and $6,200 of closing costs. Nothing you type leaves this browser.

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What you get

Enrichment · Life SkillsFree

What you finish with
Your current and new principal-and-interest payments, the monthly saving, the simple break-even month, and whether refinancing leaves you ahead or behind at the end of each year you keep the loan, with total interest left on each. It prints as a one-page summary and downloads as a spreadsheet.
Who it is for
Homeowners weighing a refinance offer, families comparing two Loan Estimates, and personal finance students learning how amortization works.
Format
Browser calculator for a phone, tablet or computer, by touch or keyboard. Prints a summary; downloads a spreadsheet (.csv); export and import a file.
Access
Free. No account, no sign-in and nothing to install. Everything you type stays in this browser; nothing is sent to Caveat.
Where it lives
The Life Skills space in Caveat Enrichment.
Support
Questions, a correction or a request: team@caveatacademic.com.

How to use it

  1. Type the balance you owe, your rate and the years left on your loan (your monthly statement has them).
  2. Type the offer’s rate and term and the total closing costs from its Loan Estimate, and say whether they are paid in cash or added to the loan.
  3. Type how many years you expect to keep the loan.
  4. Read the break-even month, then the year-by-year table, which also counts the balance still owed.
  5. Print the summary or download the spreadsheet.

Check a refinance

How the comparison works

Payments, then payments plus what is still owed.

Ahead or behind at the end of each year, payments and balance countedyr 1yr 2yr 3yr 4yr 5yr 6yr 7yr 8$0+$15k−$3kAhead or behind, each yearyr 1yr 2yr 3yr 4yr 5yr 6yr 7yr 8$0+$15k−$3k
In the example the $6,200 of closing costs are paid back by the lower payment and the faster paydown at the lower rate; by the end of year 3 the household is ahead, and after 8 years it is $14,636 ahead.

The arithmetic

Each payment uses the standard fixed-rate formula: balance × i ÷ (1 − (1 + i)−n), where i is the yearly rate ÷ 12 and n the months. The simple break-even divides the closing costs by the monthly saving. The fuller comparison adds, for each loan, every payment made by the end of a year to the balance still owed then, and subtracts the new loan’s total (with cash closing costs) from the old one’s.

Why two answers

The simple break-even treats every dollar of payment saved as money kept. But a new 30-year loan on a balance with 27 years left also stretches the loan, so less of each payment goes to principal at first; the year-by-year table catches that by counting the balance. Closing costs added to the loan raise the balance and the payment instead of being paid up front. If you may sell or refinance again before the break-even, the costs may not come back.

Sources

  1. Consumer Financial Protection Bureau. Loan Estimate and Closing Disclosure explainers (consumerfinance.gov/owning-a-home): where closing costs appear (Regulation Z, 12 CFR 1026.37 and 1026.38).
  2. Board of Governors of the Federal Reserve System. A Consumer’s Guide to Mortgage Refinancings: comparing costs against monthly savings and how long you plan to stay.
  3. Consumer Financial Protection Bureau. What is amortization and how could it affect my loan? (consumerfinance.gov/ask-cfpb).
  4. Freddie Mac, My Home consumer guidance on refinancing (myhome.freddiemac.com): rate-and-term and cash-out refinances.

The worked example is made up. Principal and interest only; your lender’s figures can differ by cents, and this page does not cover taxes, points or cash-out amounts. Your figures stay in this browser. Support: team@caveatacademic.com.