Refinance Calculator

The refinance calculator is the broad comparison tool in this group: it looks at the current loan you are replacing, the new loan you are considering, the costs of the transaction, and any cash in or cash out. It is different from the refinance break-even calculator, which isolates months to recover closing costs, and different from the cash-out refinance calculator, which starts with home value and loan-to-value limits. Use this page when you want a full fixed-loan side-by-side: payment change, new principal, estimated interest, and total payment difference.

What the calculator does

The form asks for the current loan balance, current APR, and months remaining so it can reconstruct the monthly payment needed to amortize the debt you already have. It then asks for the new APR, new loan term, refinance costs, cash out or cash in, and whether the costs are financed. Those fields create the replacement loan amount. A positive cash number adds new debt because you receive money at closing. A negative cash number reduces the new principal because you bring cash to the refinance.

This design fits a mortgage refinance, vehicle refinance, or other installment loan, but it is not a rate quote. It assumes fixed payments, constant rates, and no prepayment penalty. For home loans, compare the estimate with official closing disclosures and with the mortgage refinance calculator. For vehicle debt, the car refinance calculator is more specific. If the refinance changes your whole monthly budget, use the budget calculator before accepting a lower payment that extends debt.

Formula used by the calculator

Both the old and new payments use the standard amortizing loan equation. The monthly rate is the annual percentage rate divided by 12, and the payment count is the number of months in the term.

$\text{monthly payment} = \frac{\text{principal} \times \text{monthly rate}}{1 - (1 + \text{monthly rate})^{-\text{months}}}$

If the annual rate is zero, the calculator uses a straight division instead:

$\text{monthly payment} = \frac{\text{principal}}{\text{months}}$

The replacement principal is built from the balance being paid off, any cash movement, and financed costs:

$\text{new principal} = \text{current balance} + \text{cash out or cash in} + \text{financed costs}$

Monthly savings are the old payment minus the new payment:

$\text{monthly savings} = \text{current payment} - \text{new payment}$

The calculator’s total payment difference compares remaining old payments with new payments, upfront costs if not financed, and the cash in or cash out entry:

$\text{total payment difference} = (\text{current payment} \times \text{old months}) - ((\text{new payment} \times \text{new months}) + \text{upfront costs} + \text{cash out or cash in})$

Worked example matching the default inputs

Suppose the current balance is $50,000, the current APR is 8.5%, and there are 60 months remaining. The proposed loan has a 6.25% APR and a new 60-month term. Refinance costs are $1,200, the cash in or cash out field is $0, and the costs are financed. The calculator therefore adds the costs to the new balance:

$\text{new principal} = \text{50,000 dollars} + \text{0 dollars} + \text{1,200 dollars} = \text{51,200 dollars}$

Using the amortization formula, the current payment is $1,025.83 per month. The new payment on $51,200 at 6.25% for 60 months is $995.80 per month. The estimated monthly savings are therefore $30.02:

$\text{monthly savings} = \text{1,025.83 dollars} - \text{995.80 dollars} = \text{30.02 dollars}$

The calculator displays a break-even estimate of about 39.97 months, rounded up in the interface to 3 years 4 months, because it divides the $1,200 cost by the $30.02 monthly savings. It also estimates $11,549.59 of interest left on the current loan and $8,548.13 of interest on the new loan. The total payment difference is about $1,801.46 in favor of the refinance under these exact assumptions.

Costs and eligibility questions to check

Refinancing can involve origination charges, points, appraisal costs, title services, recording fees, taxes, prepaid interest, and escrow deposits. The CFPB Loan Estimate and Closing Disclosure are designed to show those costs in a standard format, but the timing matters: costs paid in cash affect liquidity, while costs financed into the balance affect interest. A lender may also require income verification, credit approval, collateral review, and an acceptable loan-to-value ratio. If the refinance is a mortgage, the cash-out refinance calculator can help test equity, and the debt-to-income calculator can screen monthly affordability.

Practical tips

• Compare the same items on both payments. Do not compare an old escrowed mortgage payment with a new principal-and-interest-only quote.
• Watch the term reset. A new 60-month loan after you have already paid for two years may lower the payment by extending debt.
• Treat cash out as borrowing, not savings.
• Check the result against your expected holding period. If you will sell or pay off the loan quickly, a lower rate may not recover costs.
• Ask whether a no-cost offer simply moves costs into the rate or balance.

Informational note

This calculator is an educational estimate. It does not approve credit, predict future rates, evaluate tax effects, or replace lender disclosures. Use it to structure questions before requesting quotes, then compare the actual Loan Estimate, payoff statement, and final Closing Disclosure line by line.

Sources

• CFPB, Loan options — overview of mortgage loan structures and comparison points.
• CFPB, Loan Estimate — standardized disclosure for projected loan terms and closing costs.
• CFPB, Closing Disclosure — final disclosure used to compare actual costs before closing.
• CFPB, Mortgage resources — consumer tools for comparing mortgage decisions.

Formula references

• Claim: newPrincipal=balance+(financeCosts?refinanceCosts:0)+cashInOut; payment uses fixed amortization; monthly change=currentPayment-newPayment; breakEven=upfrontCosts/monthlySavings when savings>0. Source: Regulation Z Appendix J — Annual Percentage Rate Computations, Electronic Code of Federal Regulations / CFPB. Version: 2025 annual edition of 12 CFR Part 1026, Appendix J; accessed 2026-07-09. Jurisdiction: United States federal consumer credit. Accessed 2026-07-09.
• Claim: newPrincipal=balance+(financeCosts?refinanceCosts:0)+cashInOut; payment uses fixed amortization; monthly change=currentPayment-newPayment; breakEven=upfrontCosts/monthlySavings when savings>0. Source: Principles of Finance, OpenStax, Rice University (peer-reviewed open textbook). Version: 2022 first edition, ISBN 978-1-951693-54-1. Jurisdiction: Jurisdiction-neutral finance definitions. Accessed 2026-07-09.

These sources support only the claims described above. This calculator is informational and does not replace qualified domain, legal, consumer-credit, payroll, mortgage, pensions, or retirement advice.