Understand cash breakevens and differences in equity buildup
Checking today’s rate…
A 30-yr term resets your mortgage but still saves $23,987 in interest.
Refinance Summary
Current payment
$1,967/mo
6.5% · 27 yr left
New payment
$1,703/mo
5.5% · 30 yr term
Cash Breakeven
1.5 yrs
to recover $4,500
Monthly cash impact
$263/mo
less than the current payment
Where do Refi savings come from?
$263/mo
The rate savings are real, but the term savings reduce cash upfront in exchange for re-amortizing the loan over 30 years.
Cumulative Cash Savings
Below the dotted line, you're still recovering closing costs.
Equity Difference – Current Loan vs Refi
Cumulative Savings = Cash + Equity
| Year | Cash saved* | Equity delta | Total |
|---|---|---|---|
| 1 | −$1,340 | −$183 | −$1,524 |
| 2 | +$1,819 | −$421 | +$1,398 |
| 3 | +$4,979 | −$720 | +$4,259 |
| 5 | +$11,298 | −$1,529 | +$9,769 |
| 10 | +$27,096 | −$5,160 | +$21,935 |
| 15 | +$42,894 | −$12,180 | +$30,714 |
| 20 | +$58,691 | −$24,514 | +$34,178 |
| 25 | +$74,489 | −$45,027 | +$29,462 |
| 27 | +$80,809 | −$56,411 | +$24,398 |
* Cash saved is net of the closing costs paid to refinance.
A refinance resets the clock — a lower payment over a longer term can still cost more.
Altgage Inc. NMLS #2447252 | 100 Cambridge St, Floor 14, Boston, MA 02114The old "1% rate drop" rule of thumb is outdated. Plenty of refinances pencil out at a 0.5% rate drop. The right call comes down to the two things this calculator shows side by side: how quickly your monthly cash savings repay the closing costs (the Cumulative Cash Savings chart), and how much faster you build equity than if you stayed put (the Equity Difference chart). A smaller rate drop can still be a clear win when you keep your term short.
Closing costs ÷ monthly cash savings = months to break even. Under 24 months is usually a clear yes; 24 to 48 months is a judgment call based on how long you'll stay. If the payback would run past your remaining loan term, there's no real break-even and the summary shows N/A. That's your cash-flow test, but it isn't the whole picture.
A lower rate, a shorter term, or both send more of every payment to principal instead of interest, so your balance falls faster than it would on your current loan. That gap is the green area on the Equity Difference chart and the "equity delta" in the summary. It's real net worth you're building, and it can make a refinance worth it even when the monthly cash savings look small.
A fresh 30-year refi taken several years into your current loan adds those years back. Your payment can drop while your total interest rises. Matching your remaining term keeps the same payoff date and turns a rate-and-term refi into a rate-only one, so you capture the lower rate without resetting the clock. The "Match" button does this for you.
If you're moving within a couple of years and won't reach break-even. If your current rate is already near market and you're chasing a small extra drop. If you'd reset a nearly paid-off loan and waste years of built principal. And if your credit has slipped since closing, the advertised rate may not be the one you actually get.