Understand the calculator assumptions

One monthly payment model

For starting principal P, monthly interest rate r = annual note rate ÷ 1,200, and n monthly periods: payment = P × r ÷ [1 − (1 + r)⁻ⁿ]. At 0%, payment = P ÷ n. Calculations retain precision internally and round only the displayed amounts.

A hypothetical $10,000 balance at 6% over 36 months gives $304.22 per month before fees. The note interest rate drives this formula; disclosed APR is a separate measure and is not calculated here.

Payoff strategies

Each month adds balance × monthly rate as interest, applies the scheduled payment, then applies extra principal without going below zero. A hypothetical $12,000 zero-interest balance over 12 months has a $1,000 scheduled payment. Adding $200 monthly pays it in 10 months, with no interest saving because interest is already zero.

Refinance timeline

Cash saving = old cumulative installments − new cumulative installments − cash fees. Balance-adjusted cost saving = cash saving + old remaining balance − new remaining balance. A $200 fee with identical zero-interest loans never recovers through loan savings.

What changed?

The amount, rate and term changes are applied sequentially. The three payment differences add to the overall change. This is an accounting breakdown, not a claim that a factor has a unique independent causal effect.

Rate reset example

A hypothetical $12,000 zero-interest loan over 12 months has $6,000 remaining just before payment 7. Resetting then to 12% and amortizing over the remaining 6 months gives $1,035.29 monthly.

Scope, testing and review dates

These four planning workspaces model equal monthly periods, no compounding within a month, end-of-month payments and cash fees paid separately. They exclude daily-interest schedules, financed fees, tax effects, escrow, insurance, delinquency and actual ARM contract constraints. UI and model reviewed November 8, 2026; that date does not certify live lender rates or every calculator on FinToku.

Other calculators use their own formulas and assumptions shown on their pages. Specialized tax, investment and loan models are not interchangeable with this monthly model. Model checks cover zero and tiny rates, principal/interest conservation, refinance balances and unchanged-scenario comparisons.

Payoff strategies · Refinance timeline · What changed · Rate stress