Understanding Mortgage Refinance Compare
Real-world scenario: Balance $280,000; current 6.75% / 300 months left; new 5.75% / 360 months; costs $4,000.
What is Mortgage Refinance Compare?
A cash-flow refinance screen—not an APR quote, cash-out analysis, or tax advice. Pair with the refinance break-even tool when you only know costs and savings.
- Same remaining principal for both paths
- Ignores points bought into rate unless added to costs
- Positive savings required for break-even months
The Formula
Payment Savings
Savings = Current EMI − New EMI
Worked Example
Scenario: Balance $280,000; current 6.75% / 300 months left; new 5.75% / 360 months; costs $4,000.
Step 1: Compute current EMI and new EMI
Step 2: Savings = current − new
Step 3: Break-even ≈ costs ÷ savings
Answer: See monthly savings and break-even months in the result explanation.
Common Use Cases
- Rate-drop shop: is the cut worth it?
- Term reset: 15 vs 30 year tradeoffs
- Cost recovery: months to earn back fees
Pro Tips
- Use remaining balance, not original principal
- Include lender fees in closing costs
- Longer terms can cut payment but raise interest
Limitations: Mortgage Refinance Compare results are educational finance aids—not loan offers, lease contracts, refinance quotes, or tax advice. Confirm figures with lenders and a qualified professional.
FAQ
Does this include cash-out refinance?
No. Model cash-out by raising the new loan amount (remaining balance + cash) outside this simple compare.
Why is break-even blank?
If the new payment is not lower, there is no monthly savings to recover closing costs.
Authoritative References
For consumer finance education, consult:
- CFPB — mortgages, credit cards, and consumer lending
- FTC — consumer protection basics
- Investopedia — loan and lease explainers