A lower payment is not a cheaper loan. Enter the offer. The page counts only what leaves you poorer, interest and fees, and finds the month the closing costs are truly paid back, what restarting the clock costs, and the one move that takes the rate without the stretch.
One new loan, three ledgers. The rate does the saving; the payment you choose to send decides how much of it you keep.
| Road | Payment | Payoff | Interest and costs | Kept |
|---|---|---|---|---|
| Keep the loanNo costs, no paperwork | … | … | … | … |
| Refinance, pay the new minimumThe offer as advertised | …Lowest payment | … | … | … |
| Refinance, keep your old paymentThe same bill as today, the new rate under it | … | … | … | …Most kept |
A payment is not a cost. Every payment splits into interest, which is spent, and principal, which is still yours as equity. The break-even and every “kept” figure here count only the spent part, plus what you paid to close.
How the honest break-even is found, month by month, and why the usual formula gets a different answer.
Three moves, ranked by what they keep.
Same offer, three moves. Dollar figures use the example: the $400,000 at 6.5% / 30-year loan, one year in ($395,529 owed), refinanced at 5.5% for 30 years with $6,000 of costs rolled in. Run your own numbers above.
Take the 5.5%. Keep sending the $2,528.27 you already pay, as if nothing happened. Your bill does not change, but the loan now ends Apr 2051, 5 yrs 3 mos sooner than the one it replaced, and you keep $160,199 more. The lower minimum waits underneath: a floor of $2,279.84 you can drop to in any hard month, no permission needed. The rate is the prize. The restart is optional.
Strategy #1 only works if you actually keep sending the money. A 15-year at the same 5.5% removes the choice: the minimum itself becomes $3,280.83 (+$752.56 a month), the loan ends Jul 2042, and the ledger keeps $289,290 versus riding out the old loan. Fifteen-year money also usually prices below thirty-year money, so the real offer may beat this example. The catch is the catch: that higher minimum is mandatory in your worst month too.
Sometimes the bill is the emergency: one income now, a rate that never should have happened, a budget that needs $248.43 back every month. Taking the new minimum still beats doing nothing ($59,097 saved over the run), and the costs are honestly repaid by Mar 2029. Just sign knowing the full price: the clock restarts (Jul 2056 → Jul 2057), and the relief hands back $101,102 of what strategy #1 would have kept. Relief is a fine purchase, at a known price.
Each answer below uses your loan and what you pay now. Open a tool to change the rest; your numbers carry over.
RefinanceYou are here
When does the loan end now?
Try any extra amount, one-time payments or bi-weekly, and watch the date move.
Open the payoff calculatorSee every payment?
Every payment, split into interest and principal, with the rows an extra amount deletes.
Open the scheduleDebt-free in 20 years?
Or pay $61,225 once, today. Any other month works too.
Pick a dateDebt-free by age 65?
This line uses an example birthday, Jun 1985. The tool uses yours.
Price it in birthdaysInvest the $200 instead?
Assumes 7% a year after tax, to Jul 2056. Paying extra earns a guaranteed 6.5%; the 7% is not guaranteed.
Race the two roadsPay half every 2 weeks?
The loan ends 5 yrs 10 mos sooner. 26 half payments a year equal 13 full payments.
Run the true calendarRecast after a $50,000 payment?
The new payment is $2,208.67. Keep paying $2,528.27 instead and the loan ends in May 2048.
See both roadsPay off the loan a year from now?
Your statement would show $395,529.10. The payoff adds 14 days of interest at $70.44 a day.
Price the payoffWhen can PMI stop?
Without a request it stops at payment #102. This line uses an example home value of $450,000.
Find both datesThe advertised way: closing costs divided by the monthly payment drop. On the example loan that’s $6,000 ÷ $248.43, call it 25 payments. The honest way counts costs, not payments. Each month the old loan charges more interest than the new one ($2,142 versus $1,840 in month one). The break-even is the month those savings add up to the closing costs: here, 20 payments. The two disagree because a payment is not a cost. Part of every payment is principal you keep either way.
Count the money the refinance itself consumes: origination and underwriting fees, discount points, appraisal, title work, recording. That is roughly sections A through C of the Loan Estimate. Leave out escrow prefunds and per-diem interest; you owe those under either loan, so they cannot tip the comparison. Typical all-in costs run 2 to 6% of the balance; if your quote is far outside that, ask which line items are actually new.
No. You pay it differently. The lender covers the fees and charges a higher rate, so you pay in interest, forever, instead of in cash, once. Set closing costs to $0 here and the break-even honestly reads “day one.” The catch: the rate you type must be the no-cost rate, which is higher than the paid-costs rate on the same sheet. Run both offers and compare their ledgers: over a long stay, paid costs usually win; over a short one, the credit does.
Rolling them in means borrowing the fee at the new rate for the life of the loan. On the example, financing the $6,000 pushes the break-even from 19 payments to 20 and adds $6,265 of interest over a full term. That is real but modest. If the cash would sit idle, pay at closing; it is cheaper. If the cash has better work to do (higher-rate debt, an empty emergency fund), rolling in is a fair price for keeping it. This page charges for either choice automatically.
The restart is a choice, not a consequence. Take the example offer and pay its minimum to term: the payoff slides from Jul 2056 to Jul 2057 and the ledger keeps $59,097. Take the same offer and keep sending your old $2,528.27: debt-free Apr 2051, five years earlier than the loan you left, keeping $160,199. The rate cut does the saving; the stretched term only decides how much of it leaks back out. Refinance for the rate, then set your own payment.
Not for the rate. Take the example loan one year in and price an offer at the 6.5% it already carries: the honest break-even reads Never. The payment even rises $9.67 a month, because the $6,000 of costs now ride in the balance, and riding the new loan to term costs $33,819 more than keeping the old one. At 7% the payment climbs $143.11 and the loss reaches $81,859. A refinance into a higher rate only earns its keep doing another job: cashing out equity, escaping an adjustable rate about to reset, or shedding FHA mortgage insurance. Want a smaller payment without giving up your rate? A recast re-spreads a lump over the same end date at the same rate. Want the loan gone sooner? Extra principal earns your rate, guaranteed.
When the rate drop is small, the stay is short, or the quote is fat. Drop the example to a quarter-point cut (6.25%) and the advertised formula still chirps “nine years to break even.” The ledger says the costs are not truly recovered until Apr 2041. Ride the new loan to term and the win unravels entirely: you end $10,183 behind the loan you left. Sell before the payback month and the costs were never recovered at all. Small cut, short horizon, or a payment-focused pitch: keep the loan and prepay instead.