Compare Scheduled Principal and Interest Before Fees
This calculator answers a limited question: how do the remaining payments on an existing fixed-rate loan compare with a new fixed-rate loan for the same outstanding balance? It does not decide whether refinancing is suitable or calculate an all-in saving.
Enter Comparable Loan Terms
- Enter the original principal, original term in months and fixed annual interest rate. The calculator derives the original scheduled P&I payment. Use the contractual rate, not APR.
- Enter the balance immediately after a scheduled payment. The calculation starts the next monthly accrual from that balance. A payoff quote may include additional accrued interest or fees not modeled here.
- Enter the proposed fixed rate and term. The new principal equals the current balance; financed fees, additional borrowing and cash-out are not included.
- Compare monthly P&I and total remaining scheduled P&I. The current loan’s final installment is reduced to the remaining balance plus that month’s interest.
- Obtain a lender Loan Estimate and separately account for closing costs, mortgage insurance, prepayment charges and your expected holding period.
Why a Lower Payment Can Cost More
Extending a loan’s term spreads principal over more installments. The monthly payment may fall while total interest rises. The displayed cost difference compares each loan through its own payoff date and does not discount future payments or compare equity at a common sale date.
Hypothetical cash-flow check: $3,000 of upfront costs divided by a $100 monthly P&I reduction is 30 months. This simplified break-even calculation is not produced by the tool and does not include loan-balance differences, investment returns on cash or an earlier sale.
What the Calculator Leaves Out
Taxes, homeowners insurance, PMI, closing costs and lender rounding are excluded. These expenses are not guaranteed to remain unchanged. No fixed rate-drop threshold establishes that refinancing is worthwhile. Likewise, having 20% equity does not guarantee that every type of mortgage insurance disappears.
The current payment is reconstructed from the original loan. If your loan was recast or modified, is interest-only or has an adjustable rate, this reconstruction may not match the amount due. Use the actual servicer schedule and a comparison suited to that loan type.
Sources: CFPB Loan Estimate explainer and CFPB PMI explanation.
Frequently Asked Questions
What does the refinance calculator compare?
It derives the current fixed monthly principal-and-interest payment from the original loan amount, rate and term. It amortizes the current balance at that payment, then compares a new fixed-rate loan for exactly the remaining balance. No cash-out or financed closing costs are included.
Does a lower monthly payment mean refinancing saves money?
Not necessarily. Restarting a longer term can lower the payment while increasing scheduled interest. Compare the remaining current-loan payments with the proposed schedule, then add closing costs and consider how long you expect to keep the loan.
Are closing costs or a break-even date included?
No. The displayed differences are principal and interest only. For a simple cash-flow check, upfront refinance costs divided by a positive monthly P&I reduction gives an approximate number of months to recover those costs. That ignores changes in outstanding balances, time value and future payoff timing.
What current loans can be modeled?
A fixed-rate fully amortizing loan whose payment still matches the original principal, rate and term. Both terms must be whole months from 1 to 600. Recast, modified, interest-only, adjustable-rate and negatively amortizing loans are outside this model.
Is refinancing required to remove PMI?
Not always. Conventional PMI may be cancellable under applicable requirements without refinancing; other loan programs differ. This calculator does not assess eligibility, home value, equity or mortgage-insurance changes. Ask the servicer and compare written loan terms.