Start with the current loan balance
Use the payoff or remaining principal balance on the proposed refinance date, not the original loan amount. Build the remaining old schedule from that date so the comparison covers the same decision period.
Build two schedules
| Old loan from today | Proposed refinance |
|---|---|
| Current remaining balance | New principal including financed costs |
| Current rate and remaining term | New rate and full new term |
| Remaining interest | New interest plus closing costs |
| Existing payoff date | New payoff date |
A refinance that restarts a 30-year term may lower the monthly payment while extending debt for many additional years.
Include closing costs and break-even timing
Compare the monthly payment reduction with appraisal, title, lender, recording, and other costs. A simple break-even estimate divides total refinance costs by monthly payment savings, but total-interest and payoff-date comparisons remain important.
Questions the schedules should answer
- How much does the monthly payment change?
- How many months are added or removed?
- What is the remaining interest on the old loan?
- What is the interest on the new loan, including financed costs?
- When do accumulated payment savings exceed closing costs?
- What happens if extra principal payments continue after refinancing?
Use the extra-payment guide to compare a refinance with simply paying additional principal on the existing loan.
Build and compare the schedule
Use the free amortization calculator for a standard schedule. Use the registered Windows amortization software when you need to edit individual dates, payments, rates, or notes and save the revised loan.