Calculation Logic
This calculator uses the standard amortization formula to compute your new monthly payment: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments. It then compares your remaining interest on the current loan against the total interest on the new loan, minus closing costs, to show your net savings.
How to Use
- Enter your current loan balance, rate, and years remaining.
- Input your new offered rate and desired term (15, 20, or 30 years).
- Add any extra monthly principal payment you plan to make.
- Include estimated closing costs for an accurate break-even.
- Click Calculate to see your new payment, interest saved, and break-even timeline.
Pro Tips
- Extra payments matter: Even $100/month extra can cut years off your loan and change the math dramatically.
- Closing costs vary by state: Use our Closing Cost Estimator if you are unsure what to enter here.
- Compare multiple terms: Run the calculator for 15-year and 30-year terms side by side to see the trade-off between monthly cash flow and total interest.