New monthly payment
$2,001.96
Principal & interest: $260.88 less than your current $2,262.84 payment
Monthly savings
$260.88
Break-even
35 months
Lifetime savings
$3,456
Refinance costs
$9,000
You recover the $9,000 in costs after 35 months (2 years 11 months) of lower payments, and over the full term you save $3,456 after costs.
Part of the lower payment comes from spreading your balance over a longer term rather than from the lower rate. Counting only the interest you save, the refinance covers its costs after 39 months (3 years 3 months).
- Current balance
- $300,000
- Current payment (principal & interest)
- $2,262.84
- New loan amount
- $300,000
- New payment (principal & interest)
- $2,001.96
- Closing costs
- $9,000
- Paid at closing
- $9,000
- Interest left on current loan
- $433,160
- Interest on new loan
- $420,704
- Net lifetime savings after costs
- $3,456
The new loan adds 3 years to your payoff. Paying $2,069.32 a month on it (still $193.52 less than now) keeps your current payoff date of Aug 2053 and changes the lifetime result from net savings of $3,456 to net savings of $53,702.
Current loan vs. refinance
| Keep current loan | Refinance | |
|---|---|---|
| Loan amount | $300,000 | $300,000 |
| Interest rate | 8% | 7.03% |
| Monthly payment | $2,262.84 | $2,001.96 |
| Time to pay off | 27 years | 30 years |
| Payoff date | Aug 2053 | Aug 2056 |
| Total interest | $433,160 | $420,704 |
| Refinance costs | $0 | $9,000 |
| Interest + costs | $433,160 | $429,704 |
Cumulative cost over time
- Keep current loan
- Refinance
Cost = interest paid so far, plus closing costs and points for the refinance. Once the refinance line drops below the other, refinancing is ahead.
Savings if you sell or pay off after…
| Keep the loan | Current loan cost | Refinance cost | Net savings |
|---|---|---|---|
| 1 year | $23,882 | $29,994 | −$6,112 |
| 2 years | $47,492 | $50,767 | −$3,275 |
| 3 years | $70,808 | $71,305 | −$497 |
| 5 years | $116,458 | $111,602 | $4,855 |
| 7 years | $160,611 | $150,734 | $9,877 |
| 10 years | $223,455 | $206,853 | $16,602 |
| 15 years | $316,359 | $291,666 | $24,692 |
| 20 years | $388,264 | $361,661 | $26,603 |
| 25 years | $428,884 | $410,617 | $18,267 |
| Full term | $433,160 | $429,704 | $3,456 |
Show year-by-year balances
| Year | Current loan balance | New loan balance | Net savings to date |
|---|---|---|---|
| 1 | $296,728 | $296,970 | −$6,112 |
| 2 | $293,184 | $293,720 | −$3,275 |
| 3 | $289,346 | $290,234 | −$497 |
| 4 | $285,189 | $286,496 | $2,216 |
| 5 | $280,687 | $282,485 | $4,855 |
| 6 | $275,812 | $278,184 | $7,412 |
| 7 | $270,532 | $273,570 | $9,877 |
| 8 | $264,814 | $268,621 | $12,238 |
| 9 | $258,621 | $263,312 | $14,484 |
| 10 | $251,915 | $257,619 | $16,602 |
| 11 | $244,651 | $251,511 | $18,576 |
| 12 | $236,785 | $244,961 | $20,391 |
| 13 | $228,266 | $237,935 | $22,029 |
| 14 | $219,039 | $230,398 | $23,470 |
| 15 | $209,047 | $222,314 | $24,692 |
| 16 | $198,226 | $213,644 | $25,672 |
| 17 | $186,507 | $204,344 | $26,383 |
| 18 | $173,814 | $194,368 | $26,797 |
| 19 | $160,069 | $183,668 | $26,882 |
| 20 | $145,182 | $172,192 | $26,603 |
| 21 | $129,060 | $159,882 | $25,921 |
| 22 | $111,600 | $146,678 | $24,795 |
| 23 | $92,690 | $132,515 | $23,179 |
| 24 | $72,211 | $117,324 | $21,021 |
| 25 | $50,033 | $101,031 | $18,267 |
| 26 | $26,013 | $83,553 | $14,855 |
| 27 | $0 | $64,807 | $10,719 |
| 28 | $0 | $44,700 | $6,803 |
| 29 | $0 | $23,133 | $4,346 |
| 30 | $0 | $0 | $3,456 |