1. What is Refinance Worth Calculation?

The refinance worth calculation determines whether refinancing a loan makes financial sense by comparing the break-even point (when savings cover costs) with how long you plan to keep the loan.

2. How Does the Calculator Work?

The calculator uses the following logic:

Where:

• Closing Costs — Total fees to refinance (USD)
• Monthly Savings — Reduction in monthly payment (USD)
• Planned Tenure — Months you expect to keep the loan

Explanation: If your savings cover the costs before you plan to sell/refinance again, then it's worth it.

3. Importance of Refinance Calculation

Details: This calculation helps avoid refinancing when you won't keep the loan long enough to recoup costs, potentially saving thousands.

4. Using the Calculator

Tips: Enter all costs (appraisal, fees, points), your true monthly savings, and realistic time you'll keep this loan.

5. Frequently Asked Questions (FAQ)

Q1: What counts as closing costs?
A: Include all fees: application, appraisal, title search, origination, points, and other lender charges.

Q2: How accurate should monthly savings be?
A: Use actual new payment minus current payment, including any escrow changes.

Q3: What if I might move sooner?
A: Use conservative estimates - refinancing often only makes sense if staying 3-5+ years.

Q4: Does this account for total interest?
A: No, this is a simple break-even analysis. Run full amortization for total cost comparison.

Q5: What about cash-out refinances?
A: This calculator is for rate/term refinances. Cash-out decisions involve different factors.