What this calculator helps you do
Compare current and proposed loan payments and estimate how long monthly savings take to recover refinance costs. The calculation runs entirely in your browser; SENNA Finance does not receive the values entered into this tool.
Worked example
Using the default example—current loan balance of $250,000, current annual rate of 7.25%, remaining term of 276 months, new annual rate of 6.25%, new term of 240 months—the calculator returns estimated monthly savings of $36.63; current payment: $1,863.95; new payment: $1,827.32. Change the assumptions to match your own case rather than relying on the example.
Formula and calculation basis
Inputs are converted to the periodic units required by the formula. Results are calculated with full JavaScript numeric precision and rounded only for display.
How to interpret the result
A short break-even period can support refinancing only when you expect to keep the loan beyond that point and the new term does not create an unwanted lifetime cost.
Common mistakes to avoid
- Focusing only on the lower payment while extending the debt for many more years.
- Leaving appraisal, legal, origination, or discharge costs out.
- Assuming future rates or holding periods are certain.
Limits and assumptions
The model assumes fixed rates and immediate refinancing. It does not model taxes, points, changing insurance, or opportunity cost.
Outputs are estimates, not contractual quotations, regulated disclosures, tax advice, investment advice, or a substitute for professional review.
Frequently asked questions
What is the break-even month?
It is the first month when cumulative modeled payment savings equal or exceed closing costs.
Can a refinance lower payment but increase total interest?
Yes, especially when the new term is much longer.
What if monthly savings are negative?
The proposed refinance does not reduce the scheduled payment under the entered assumptions.
Sources and reference context
External references provide educational context and do not imply endorsement of SENNA Finance.