How the breakeven is calculated

Refinancing trades an upfront cost for a lower monthly payment. The calculator computes your current payment from the balance, rate, and months remaining, then the new payment at the new rate and term. Divide the closing costs by the monthly saving and you get the breakeven: the month the refinance starts making you money. With the defaults, dropping from 6.8% to 5.4% on a $350,000 balance saves about $266 a month, so $4,500 of costs pays for itself in roughly 17 months.

Watch the lifetime number, not just the payment

A lower payment can still cost more overall. Reset a loan with 22 years left back to 30 years and you pay interest on the balance for eight extra years. That is why the lifetime difference is shown next to the monthly saving: it compares everything you would pay on the old loan against everything on the new one, closing costs included. If the monthly number is green and the lifetime number is red, the refinance is a cash-flow decision, not a savings decision.

US and Canadian mortgages compound differently

US mortgage math divides the annual rate by twelve. Canadian fixed mortgages compound semi-annually by law, which makes the true monthly rate slightly lower for the same quoted rate: a 6% Canadian mortgage on $100,000 over 25 years is $639.81 a month, not the $644.30 a US-style calculator reports. The convention toggle above applies the correct formula either way. Most generic calculators skip this entirely.

Educational estimates, not lending advice. Actual payments vary with fees, insurance, and lender rounding.