Refinance Calculator

How to read the result

A few thresholds the model can't flag on its own.

• The IRD method matters more than the rate spread. On a fixed-rate mortgage, the IRD penalty calculation method (posted-rate IRD on big banks vs discounted-rate IRD on monolines) can swing the actual break-cost by 2 to 3x on the same balance. The model uses the number you input; if you're not sure which method applies to your file, get a written pay-out statement from the lender before treating any output as decision-grade.
• Break-even at 18 months only matters if you stay 5+ years. The model shows the month at which cumulative savings on the new mortgage exceed the penalty + closing costs. That number is meaningful only over the new term. If there's any chance you'll sell the property, move, or refi again within 2 to 3 years, run the math against the shorter horizon. A refi that breaks even in 18 months on a 5-year hold is a great move; the same refi on a 30-month hold is usually a wash or worse.
• Extending amortization is a separate decision from refinancing. A refi to a 30-year amortization (where the new file qualifies) lowers monthly payment but adds total interest over the life of the loan. The model shows what the extension costs in dollars; the strategist call is whether that cash-flow relief is worth it on your file. If you're refi-ing to redirect freed cash flow at consumer debt or to a productive use, the trade is usually positive. If you're extending just to lower the payment with no plan for the freed dollars, the trade rarely pencils.
• If the refi rolls in consumer debt, the model can't price the behavioral risk. A cash-out refi that consolidates credit cards into the mortgage at a much lower blended rate is a powerful play. It also fails more often than it should, and the failure mode is always the same: the consumer debt comes back. The Cash-Out Refinance strategy walks through the discipline that has to come with the consolidation. The math works on the model; whether it works in your household is a different question.

What this calculator misses

Refi math depends on more than the rate spread. Some lenders cap IRD against the spread to a comparable-term posted rate; others use a much harsher fixed-posted-spread formula that can balloon the penalty into the tens of thousands. The other consideration is amortization: extending the new mortgage to 30 years drops the payment but adds interest over the life of the loan. That's a real trade-off, not always the right one.