Calculator Inputs
Example Data Table
| Field | Example value | Notes |
|---|---|---|
| Current balance | $275,000 | Remaining principal on the loan. |
| Current rate | 6.750% | Existing annual rate. |
| Remaining term | 22 years | Time left to pay off. |
| New rate | 6.000% | Proposed refinance rate. |
| New term | 30 years | Term reset to reduce monthly payment. |
| Closing costs | $4,500 | Fees and charges for the refinance. |
| Points | 0.750% | Discount points as a percent of loan. |
| Roll costs | Yes | Adds costs to the new principal. |
| Extra payment | $0 | Optional; speeds payoff if used. |
Formula Used
Monthly principal and interest for a fixed-rate loan is computed using:
- P is the principal used in the scenario.
- r is the monthly rate (APR ÷ 12).
- n is the number of months in the term.
Each month’s interest is balance × r. Principal paid is payment − interest. The balance reduces by the principal paid.
How to Use This Calculator
- Enter your current balance, rate, and remaining years.
- Optionally enter your actual monthly payment and escrow.
- Enter the new rate and the reset term you are considering.
- Add closing costs, points, and choose whether to roll them in.
- Click Calculate to see comparisons above the form.
- Use the download buttons to export your results.
Term reset changes cash flow
A refinance term reset extends the payoff clock, often lowering monthly principal and interest. For example, moving from 22 years remaining to a new 30-year term can reduce required payment even if the rate drops only modestly. This calculator shows both monthly P&I and a total-with-escrow view.
Interest trade-offs over time
Lower payments are not the same as lower interest. When you reset to a longer term, early payments are more interest-heavy because the balance declines more slowly. Compare total interest for the modeled payoff period, not just the first year. Use the snapshot table and the chart to see how balances diverge. If the new rate is lower, the lines can cross, showing slower balance reduction early yet a stronger decline later.
Upfront costs and break-even
Closing costs and points can be paid upfront or rolled into the new loan. Paying upfront increases cash needed today but avoids interest on those fees. When costs are paid upfront, break-even months are estimated as upfront costs divided by monthly savings. If the refinance increases monthly total, break-even is not reached. Compare total cost as interest plus upfront fees, especially when you may sell, move, or refinance again within five to seven years.
Cash-out and principal growth
Cash-out adds to the new principal and can erase payment savings. A $10,000 cash-out at 6.000% over 30 years adds about $60 per month to P&I, before escrow. Rolling costs plus cash-out can make the new principal meaningfully higher than today’s balance, increasing long-run interest.
Practical decision checks
Focus on your goal: payment relief, faster payoff, or equity access. Try adding an extra payment to see how quickly a longer term can be pulled back. Review the payoff dates and the interest difference together. A refinance can be sensible even with higher total interest if it improves monthly stability and fits your horizon.
FAQs
1) What does a term reset mean?
A term reset replaces your remaining years with a new full term, such as 30 years. This usually lowers required monthly principal and interest, but it can extend payoff time and increase total interest unless the new rate is much lower.
2) Should I roll closing costs into the loan?
Rolling costs reduces upfront cash, but you pay interest on those fees for years. Paying upfront raises today’s out-of-pocket amount, yet can reduce long-run interest and may shorten break-even if monthly savings are positive.
3) Why is break-even shown as not reached?
Break-even only applies when you pay costs upfront and the refinance lowers your monthly total. If the new payment is equal or higher, the upfront cost is never recovered through monthly savings, so break-even is not achieved.
4) How does an extra payment change results?
Extra payments go directly to principal after interest, reducing the balance faster. That shortens the modeled payoff time and lowers total interest. It can also help offset the interest impact of resetting to a longer term.
5) How does cash-out affect the refinance?
Cash-out increases the new principal, which raises monthly payment and interest. Even a small cash-out can erase payment savings from a lower rate. Compare the new principal to your current balance to see the long-run cost.
6) Is the payoff date exact?
It is an estimate based on your start date, rate, and the modeled payment behavior. Real payoff timing can differ because lender rounding, escrow changes, partial months, and payment posting rules vary by servicer.