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A lower payment is not the same as saving money. Here is the difference.
Refinance pitches lead with the monthly payment drop because it always looks good — even when the new loan costs more in total. This calculator gives you the break-even month, then the rigorous version: everything you pay plus everything you still owe at the month you plan to leave, on both paths. And it warns you when resetting to a new 30-year clock quietly raises your lifetime interest.
Homeowners getting refi mailers use it to test the pitch: break-even month first, then the horizon total that exposes a reset clock. It is the calculator that separates a lower payment from actual savings — the confusion lenders profit from.
Closing costs ÷ monthly payment savings. $4,500 in costs with a $336 monthly saving breaks even in about 13 months — leave before that and the refi cost you money, stay past it and you are ahead. But break-even alone misses the clock reset: a new 30-year term on a loan with 27 years left adds three years of payments.
No — the payment can drop while total interest rises, whenever the new term is longer than your remaining one. On a $320,000 balance, dropping from 7.5% to 6.25% with a fresh 30-year clock saves $336 a month but can still add interest versus finishing the current loan. The horizon table above compares outlay plus remaining debt so the trade is visible.
Typically 2–3% of the loan: origination, appraisal, title, and recording fees. Use line J of the Loan Estimate — and be skeptical of "no-closing-cost" refis, which either raise the rate (lender credit) or roll costs into the balance. Both are fine choices; neither is free.
It is a decent first filter, nothing more. On large balances a 0.5% drop can pay back in a year; on a small balance with five years left, even 2% may never recoup the closing costs. Balance, spread, term reset, and years-stayed decide it — which is why they are the inputs here.