How the break-even math works
Operator-voice answers to the most-asked questions about refinance math. Written by Daron Hays — 30-year licensed contractor, active investor, founder of RefiFastCalc.com. Every formula this tool runs is on this page. A number you cannot check is a number you should not trust.
Monthly savings
Monthly savings is your current monthly payment minus the payment on the new loan. The new payment is calculated on your current balance at the rate and term of the offer, using standard fixed-payment amortization.
Total refinance cost
Total refinance cost is the closing and lender costs you enter. For a home loan it also adds discount points — a percentage of the balance being refinanced — and any escrow or prepaid amounts you enter.
The break-even month
Break-even is your total refinance cost divided by your monthly savings, rounded up to the next whole month. If the new payment is not lower than your current one, there is no break-even month and the result says so instead of showing a number.
Lifetime cost difference
A break-even month on its own can hide a longer term. The lifetime cost difference is the interest on the new loan, plus the total refinance cost, minus the interest still remaining on your current loan. A positive number means the refinance costs you more across the full life of the debt even when the monthly payment drops.
Credit-card and revolving debt
Revolving debt has no fixed term, so your current payoff is simulated month by month from the fixed payment you enter. If that payment never clears the balance, the tool says so rather than inventing a payoff date.
What the math does not include
The comparison uses only the balance, rate and term you enter. Property taxes, insurance, HOA dues, mortgage insurance, and future rate changes on an adjustable loan are not part of the payment comparison. Every figure is an estimate built from your numbers.
This "How we Calculate" page is part of RefiFastCalc.com — a professional refinance analysis tool built for you. The math described above is designed to give you professional insights and increased knowledge to help with your crucial decision making process for your refinance.
Educational information, not financial, legal, or lending advice. RefiFastCalc is not a lender, broker, or loan originator; rates and approvals come only from licensed lenders.