★ COMPARISONS · MORTGAGES · REFINANCE VS EXTRA PAYMENTS
Refinancing to 6% saves $197.26 a month — but paying $200 extra wins by $49,627.88 in total. Compare both paths on the same $300,000 loan at 7.00%: the refinance payment, the break-even on the $4,000 closing costs, and the extra-payment payoff — with the total cost, not just the monthly payment. This one is the REFINANCE-VS-EXTRA comparison — a lower rate against extra payments — the mortgage-refinance-calculator page is the REFINANCE tool — one refinance on its own — not against extra payments; the mortgage-extra-payment-calculator page is the EXTRA-PAYMENT tool — extra payments on their own — not against a refinance; and the refinance-break-even-calculator page is the BREAK-EVEN tool — the closing-costs break-even alone — not the total-cost verdict.
A $300,000 loan at 7.00% over 30 years: refinancing to 6.00% is $1,798.65 a month and breaks even in month 21, while $200 a month extra pays the loan off in 275 months and saves $116,640.00. The monthly payment and the total cost point in opposite directions — put your own numbers in and see which one wins for you.
It means that, on the defaults, paying $200 a month extra beats refinancing by $49,627.88 in total interest — even though the refinance cuts the monthly payment by $197.26. The refinance payment is $1,798.65 a month against $1,995.91 now, so the monthly saving is real. But the refinance restarts the 30-year clock: you pay the lower rate for 360 fresh months, and the interest adds up to $347,514.57 plus the $4,000.00 closing costs — $351,514.57 in total. The extra $200 a month keeps the 7.00% rate but attacks the balance directly: the loan is gone in 275 months, 85 months early, and the interest is only $301,886.69 — a saving of $116,640.00 against doing nothing. The monthly payment and the total cost point in opposite directions, and the total cost is the honest comparison.
The break-even is about the closing costs, not the total cost. The $4,000 of closing costs is recovered in month 21 — after 20.28 months the $197.26-a-month saving has covered it. But breaking even on the closing costs does not mean the refinance wins: it only means the refinance has paid for itself so far. The refinance still loses by $49,627.88 over the full term, because the restarted clock costs more than the lower rate saves. A break-even under two years looks like a green light; it is only the first hurdle.
Extra payments work because they cut principal early. At $100 a month extra the loan still takes 310 months and saves $69,337.93; at $500 a month extra it takes 208 months and saves $200,235.42. Every extra dollar goes straight to principal, and every dollar of principal removed early stops earning interest for the rest of the loan. That is why the saving grows faster than the extra payment: doubling the extra from $100 to $200 nearly doubles the saving, from $69,337.93 to $116,640.00.
Doing both beats doing either. Refinancing to 6.00% AND paying $200 a month extra pays off in 279 months at a total cost of $260,341.13 — better than either path alone, and it saves $162,185.56 against doing nothing. If the lower payment is what you need — for cash flow, not for total cost — the refinance plus the extra payment is the honest way to get it: take the lower rate, then keep paying the old amount.
On the defaults: $300,000 at 7.00% over 30 years, refinance to 6.00% with $4,000 closing costs, or $200 a month extra.
And the other way: closing costs of $4,734.14 break even in exactly 24 months; an extra payment of $329.99 a month pays the loan off in 20 years; and a refinance rate of 5.2725% makes the refinance total cost exactly tie the extra-payment path.
The defaults are a $300,000 loan at 7.00% over 30 years, a refinance to 6.00% over a fresh 30 years with $4,000 in closing costs, or $200 a month extra at the same 7.00% rate. They are a starting point, not a quote: the model counts principal and interest only. Property tax, homeowners insurance, mortgage insurance and escrow are not in it, and the refinance assumes the new loan is the same $300,000 — in real life the closing costs are often rolled into the loan, which raises the balance and the payment. The extra-payment path assumes you pay the extra every month from the first payment and never miss one, and the last payment is adjusted so the balance closes at exactly zero. The model does not count the value of the lower payment — cash flow matters, and a payment $197.26 lower each month is worth something the total cost cannot price. Change the rate, the costs and the extra payment to your own numbers before you decide.
These notes repeat in every explainer section because this page is built to be read start to finish: the break-even is about the closing costs, not the total cost; extra payments work because they cut principal early; and doing both beats doing either.
| Output | Formula | What it means |
|---|---|---|
| Current payment | loan × amort. factor at 7.00%, 30 yr | $1,995.91 a month. |
| Refinance payment | loan × amort. factor at 6.00%, 30 yr | $1,798.65 a month. |
| Refinance saves a month | current payment − refinance payment | $197.26 a month. |
| Break-even | closing costs ÷ monthly saving, rounded up | month 21 — 20.28 months exactly. |
| Interest doing nothing | 360 payments − loan | $418,526.69. |
| Refinance interest | 360 refinance payments − loan | $347,514.57. |
| Refinance total cost | refinance interest + closing costs | $351,514.57. |
| Extra payments: payoff | iterative amortization at 7.00% | 275 months — 85 months early. |
| Extra payments: interest | total paid − loan | $301,886.69. |
| Extra payments: interest saved | base interest − extra-path interest | $116,640.00. |
| Refinance + $200 extra | iterative amortization at 6.00% | 279 months, $260,341.13 total ($256,341.13 interest). |
| Winner (total cost) | lower total cost wins | Extra payments by $49,627.88. |
| Verdict | in words | Extra payments win by $49,627.88. |
| Reverse: Closing costs for a 24-month break-even | step | $4,734.14: Refinance $1,798.65/mo saves $197.26/mo (break-even month 24); $200/mo extra pays off in 275 months and saves $116,640.00 — extra payments win by $50,362.02. |
| Reverse: Extra payment to pay off in 20 years | step | $329.99 a month: Refinance $1,798.65/mo saves $197.26/mo (break-even month 21); $329.99/mo extra pays off in 240 months and saves $160,311.65 — extra payments win by $93,299.52. |
| Reverse: Refinance rate that ties the extra-payment total cost | step | 5.2725%: Refinance $1,660.79/mo saves $335.11/mo (break-even month 12); $200/mo extra pays off in 275 months and saves $116,640.00 — refinance wins by $0.72. |
| $100 a month extra instead of $200 | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 21); $100/mo extra pays off in 310 months and saves $69,337.93 — extra payments win by $2,325.80. |
| $500 a month extra instead of $200 | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 21); $500/mo extra pays off in 208 months and saves $200,235.42 — extra payments win by $133,223.29. |
| Refinance to 5.50% instead of 6.00% | same model | Refinance $1,703.37/mo saves $292.54/mo (break-even month 14); $200/mo extra pays off in 275 months and saves $116,640.00 — extra payments win by $15,325.43. |
| $8,000 closing costs instead of $4,000 | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 41); $200/mo extra pays off in 275 months and saves $116,640.00 — extra payments win by $53,627.88. |
| Refinance to 6.00% AND pay $200 a month extra | same model | Refinance to 6.00% plus $200/mo extra pays off in 279 months; total cost $260,341.13 — saves $162,185.56 vs doing nothing. |
| $0 closing costs (no-fee refinance) | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 1); $200/mo extra pays off in 275 months and saves $116,640.00 — extra payments win by $45,627.88. |
| $0 extra — do nothing | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 21); $0/mo extra pays off in 360 months and saves $0.00 — refinance wins by $67,012.13. |
| Refinance to 7.00% — same rate, no saving | same model | Refinance $1,995.91/mo saves $0.00/mo (break-even never); $200/mo extra pays off in 275 months and saves $116,640.00 — extra payments win by $120,640.00. |
| $0 closing costs — break-even in month 1 | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 1); $200/mo extra pays off in 275 months and saves $116,640.00 — extra payments win by $45,627.88. |
| $2,000 a month extra | same model | Refinance $1,798.65/mo saves $197.26/mo (break-even month 21); $2,000/mo extra pays off in 100 months and saves $322,698.39 — extra payments win by $255,686.26. |
Figures are the model's own totals on the numbers you type, computed to the cent from unrounded values: the payments come from the amortization factor, the break-even is the closing costs divided by the monthly saving and rounded up to the next whole month, and the extra-payment path is an iterative amortization month by month, with the last payment adjusted so the balance closes at exactly zero — cross-checked against the closed-form balance after 120 months to under $0.01. The real-world anchor is the payment formula, not a rate survey: the 7.00% and 6.00% are scenario rates, not quotes, and real refinance rates move daily — check the current rate before you decide, and remember the rate you lock is the one in your loan estimate, not the one in a survey. The model leaves out property tax, homeowners insurance, mortgage insurance, closing costs rolled into the loan, refinancing costs beyond the closing costs, and the value of a lower monthly payment. It assumes the refinance restarts a full 30-year term and that you stay in the home for the whole term — if you sell or refinance again, the total cost comparison changes. This page is a comparison tool, not mortgage advice: talk to a licensed loan officer before you refinance.
On a $300,000 loan at 7.00% over 30 years the payment is $1,995.91 a month; refinancing to 6.00% is $1,798.65 a month, saves $197.26 a month, and breaks even on the $4,000 closing costs in month 21 (20.28 months exactly). Doing nothing costs $418,526.69 in interest; refinancing costs $351,514.57 in interest plus closing costs; paying $200.00 a month extra costs $301,886.69 in interest, saves $116,640.00 and pays off in 275 months — extra payments win by $49,627.88. Refinancing to 5.50% saves $292.54 a month; refinancing AND paying $200 extra pays off in 279 months at a total cost of $260,341.13. Source: Bright Side Kit, brightoolbox.com.
On the defaults, no — paying $200 a month extra wins by $49,627.88 in total cost. The refinance saves $197.26 a month but restarts the 30-year clock, so its total cost is $351,514.57 against $301,886.69 for extra payments.
Month 21 — 20.28 months exactly. The $4,000 closing costs divided by the $197.26-a-month saving is 20.28 months, rounded up to the next whole month.
$116,640.00 in interest, and the loan is paid off 85 months early. The $300,000 loan at 7.00% is gone in 275 months instead of 360.
That is the best path: refinancing to 6.00% and paying $200 extra pays off in 279 months at a total cost of $260,341.13. You get the lower rate and the early payoff together.
5.2725% — at that rate the refinance total cost exactly ties the extra-payment path. At 5.50% the refinance still loses: its total cost is $317,212.12 against $301,886.69.
$329.99 a month on top of the $1,995.91 payment. At $319.99 extra it takes 243 months; at $339.99 it takes 238.
No — breaking even on the closing costs in month 21 only means the refinance has paid for itself so far. The refinance still loses by $49,627.88 over the full term. Compare total cost, not just the break-even.
Property tax, homeowners insurance, mortgage insurance, and closing costs rolled into the loan. It also assumes you stay for the full term and never miss an extra payment.