Refinance Decision Sheet
Break-even is the easy half. The lifetime interest is the half that hides.
BFCBrilliance · bfcbrilliance.com/tools/refinance-break-even-calculator
The arithmetic
- BREAK-EVEN
- closing costs ÷ monthly saving
- Monthly payment
- B x r ÷ (1 − (1 + r)^−n), r = rate ÷ 1200
- Total interest
- payment x months − balance
- FAIR COMPARISON
- set new term = months remaining
- Defaults: payment falls
- by over $400 a month
- Defaults: lifetime interest
- RISES by $48,600 — $53,100 with costs
- ⚠ A lower payment
- is not automatically a saving
- ⚠ Costs rolled in
- are still paid, with interest on top
- ⚠ Principal and interest only
- tax and insurance excluded both sides
Offers compared
| Lender | Rate | Term | Payment | Costs | Break-even |
|---|---|---|---|---|---|
This decision
- Property
- Date
- Balance
- Current rate
- Months remaining
- CURRENT PAYMENT
- New rate
- New term
- NEW PAYMENT
- Monthly saving
- Closing costs
- BREAK-EVEN MONTHS
- How long I will really stay
- Net over that time
- LIFETIME INTEREST CHANGE
- Same-term comparison
- Decision
Before refinancing
- Ran the comparison with the new term SET TO months remaining
- Checked the lifetime interest change, not just the payment
- Decided which problem you are solving — cash flow or total cost
- Confirmed whether closing costs are paid up front or rolled in
- Break-even compared against how long you will REALISTICALLY stay
- Prepayment penalties checked on both the old and new loan
- Fees itemised — some are negotiable
- Mortgage insurance changes counted separately
- Whole picture reviewed with a qualified adviser or broker
The lower payment can cost more
Refinancing resets the clock. Rolling 22 years remaining into a fresh 30-year term lowers the payment partly through the rate and partly by spreading the debt over eight more years — on the defaults, over $400 a month lower and about $48,600 more interest, or $53,100 with costs. Both true at once, and only the first appears on the offer.
One input makes it honest
Set the new term equal to the months remaining on your current loan. That isolates the effect of the rate alone and answers the real question: at the same finishing line, is this cheaper? If the refinance only wins by extending the term, you have learned something important about the offer.