The Quicken 2012 Refinance Calculator merely calculates the difference in mortgage payments if you make new, lower payments; then it tells you how long it would take the savings from these lower payments to pay back the refinancing costs you incur.

For example, if you save \$50 per month because you refinance and it costs \$500 to refinance, the Refinance Calculator tells you that it would take ten months of \$50-per-month savings to recoup your \$500.

You know what? Although you may want to know how long it would take to recoup the refinance costs, that information doesn’t tell you whether refinancing is a good idea. Deciding whether to refinance is very, very complicated.

You can’t just look at your next few payments, like the Refinance Calculator does. You also need to look at the total interest you would pay with the old mortgage and the new mortgage.

The Refinance Calculator just doesn’t do what it purports to do.

Here are two general rules to help you make smarter refinancing decisions:

• First, if you want to save interest costs, don’t use refinancing as a way to stretch out your borrowing. That is, if you refinance, make sure that you make payments large enough to pay off the new mortgage by the same time you would have paid off the old mortgage.

In other words, if you have 23 years left on your old mortgage, don’t go out and get a 30-year mortgage. Find a lender who will let you pay off the new mortgage in 23 years.

• Here’s a second trick, if you can find a willing lender. Ask the lender to calculate the annual percentage rate (APR) on the new mortgage, assuming that you’ll pay off the mortgage by the same time you would have paid off the old mortgage.

(An APR includes all the loan’s costs — interest, points, miscellaneous fees, and so on — and calculates an implicit interest rate.) If the APR on the new loan is lower than the current loan’s interest rate, refinancing would probably save you money.

When you base your refinancing decision on the comparison between the new loan’s APR and the current loan’s interest rate, you assume that you’ll live in your current house until the mortgage is paid.