Broker DaveWhat rate do you actually need?
“Refinance when rates drop a point” is advice with no math behind it. The real answer depends on what you owe, what the refinance costs, and how long you're keeping the house — so this calculator asks those three things and solves for the rate.
The loan you have
Principal balance from your statement — not the payoff quote, which adds accrued interest and fees.
28 yrs left. Five years into a 30-year note is 300.
What the refinance costs
Lender fees, title, appraisal, prepaids. This is the number the new rate has to earn back.
The loan you'd be getting
Adds 2 yrs to your payoff. “Match what's left” is the apples-to-apples comparison.
How long you'll keep it
5 yrs. This is the input that decides everything — be honest, not optimistic.
Got a quote?
That's 0.500 points below your 7.125%. At that rate the costs are repaid and you're ahead — balance included — by 5 yrs. Anything lower is profit.
Two answers, and why they differ
| Payment recoup | True break-even | |
|---|---|---|
| The rate you need | 6.75% | 6.625% |
| What it measures | Payment drop pays the costs back | You're genuinely ahead, balance included |
| Counts the term reset | No | Yes |
| Payment must fall by | $106.67/mo | — |
Every other refi calculator gives you the left column. Closing costs ÷ monthly savings — simple, and easy to game. Stretch a loan with 28 yrs left back out to 30 yrs and the payment falls on its own, with no rate improvement at all. The right column measures dollars spent plus what you still owe on the same date, so a slower paydown can't hide inside it.
The trick to watch for
On a fresh 30 yrs, your payment drops below today's at any rate under 7.174% — which is higher than the 7.125% you already have.
So someone can hand you a worse rate, call it a “lower payment,” and be telling the truth. You'd be paying more interest on a loan that now runs 2 yrs longer. That's why the number this page leads with is the one that counts your balance — and why is the honest comparison.
Every rate, and whether it works
| Rate | Payment | Saves/mo | Usual recoup | True break-even | At 5 yrs |
|---|---|---|---|---|---|
| 7% ✗ | $2,704 | $48 | 11 yrs 3 mos | never | −$6,730 |
| 6.875% ✗ | $2,670 | $82 | 6 yrs 7 mos | never | −$4,172 |
| 6.75% ✗ | $2,636 | $116 | 4 yrs 8 mos | 7 yrs 2 mos | −$1,617 |
| 6.625% ✓ | $2,602 | $149 | 3 yrs 7 mos | 4 yrs 4 mos | +$938 |
| 6.5% ✓ | $2,569 | $183 | 3 yrs | 3 yrs 2 mos | +$3,490 |
| 6.375% ✓ | $2,535 | $216 | 2 yrs 6 mos | 2 yrs 7 mos | +$6,041 |
| 6.25% ✓ | $2,502 | $249 | 2 yrs 2 mos | 2 yrs 2 mos | +$8,589 |
| 6.125% ✓ | $2,469 | $282 | 1 yr 11 mos | 1 yr 10 mos | +$11,136 |
| 6% ✓ | $2,437 | $315 | 1 yr 9 mos | 1 yr 7 mos | +$13,681 |
| 5.875% ✓ | $2,404 | $347 | 1 yr 7 mos | 1 yr 5 mos | +$16,224 |
| 5.75% ✓ | $2,372 | $380 | 1 yr 5 mos | 1 yr 4 mos | +$18,765 |
| 5.625% ✓ | $2,339 | $412 | 1 yr 4 mos | 1 yr 2 mos | +$21,303 |
| 5.5% ✓ | $2,307 | $444 | 1 yr 3 mos | 1 yr 1 mo | +$23,839 |
✓ means the refinance is genuinely ahead before 5 yrs is up. The last column is your net position at that date — every dollar paid, plus what you still owe, against doing nothing.
Year by year
Cumulative savings against the balance you'd still owe, year by year.
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Set an alert at 6.625% and I'll email you the day I can actually quote it. One email, no newsletter.
Watch for 6.625%Closing costs ÷ monthly savings isn't the whole answer
The number everyone quotes
$6,000 in costs, $200 a month saved, so you break even in 30 months. Clean, memorable, and it quietly assumes the only thing that changed is your payment.
What it leaves out
Restarting a loan you're eight years into means paying year-one interest all over again. The payment falls, the balance falls slower, and none of that shows up in the simple formula.
What this one measures
Dollars you've spent plus what you still owe, both loans, same date. If the refinance is genuinely ahead, it survives that test. If it only looked good, it doesn't.
How to read your own answer
- Be honest about how long you're staying. This single input moves the required rate more than anything else. Most people dramatically overestimate it — the median owner sells or refinances again long before the loan matures. If you're unsure, use the shorter number.
- Compare term to term. Hit “match what's left” first. If a 30-year reset is the only way the deal works, the term is carrying it, not the rate — and you should know that before you sign, not after.
- Financing the costs isn't free. Rolling them in keeps cash in your pocket and charges you interest on them for the whole term. The calculator prices both; the difference is usually smaller than people fear and never zero.
- “No closing cost” means a higher rate. The costs didn't vanish; they were priced into the loan. Run that quote here at its real rate with $0 costs and compare it honestly to the version with costs.
- This is principal and interest only. Taxes and insurance ride along unchanged, so leaving them out doesn't tilt the comparison. If you're dropping mortgage insurance too, that's real savings this page doesn't count — the deal is better than it looks.
This calculator is educational and is not a loan offer, a rate quote, or a commitment to lend. Every figure is an estimate. David Lurvey, NMLS 410420.
Not there yet?
Once you know the rate you need, you don't have to watch the market every day. Leave me the number and I'll email you when I can actually quote it.
Set a rate alertWant a shorter loan, not a cheaper one?
If the goal is being done sooner rather than paying less each month, that's a different question — and often the answer is no refinance at all.
Early payoff calculator