What does a minus (-) number mean when using the refinance calculator?

Fate

What does a minus (-) number mean when using the refinance calculator?

Tom Young

Looking at that calculator the line "Monthly Savings" seems to be nothing more than the difference between your current monthly payment and the proposed mortgage's monthly payment.  So  a minus sign here states the obvious: your new monthly payment would be higher than your current monthly payment.

Fate

Thanks Tom. I understand that. However, doesn’t Quicken give an estimate of time required to ‘break even’ when refinancing considering the lower interest rate?

Tom Young

I'll admit that I've never, ever, used this calculator and looked at it for the first time today.  Color me unimpressed.

The underlying assumption seems to be you are refinancing using a new loan that perfectly mimics the remaining term of your old loan, at what ever rate you're going to get.  If it turns out that you lower your monthly payments versus your current loan, all the calculator does is divide the monthly savings in principal and interest payment into the costs (fees and points) of obtaining the new loan and comes up with that "Months to break even" number.  I don't know why it even asks for the monthly escrow amount since it doesn't use that number for anything.

If you new P&I figure is higher than your current payment then that Months to break even number turns negative and is entirely useless.