Refinance Break-Even Calculator

Compare your current payment with a new estimated payment and calculate the time needed to recover refinance costs.

Calculator

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How It Works

The calculator estimates the current principal-and-interest payment and compares it with the new loan payment. Closing costs are divided by the monthly savings to find a simple break-even period.

A lower payment is not automatically a lower total cost if refinancing extends the repayment period.

Not included: This simple break-even model ignores taxes, points, prepaid items, future refinancing, and differences caused by resetting the loan term.

Formula

Break-even months = closing costs ÷ monthly payment savings
  • M — Monthly payment
  • C — Closing costs
  • S — Monthly payment savings

Example

Example inputs: Balance $280,000, current 7%, new 6%, 25-year remaining/new term, $5,000 costs.

Result: The result shows the estimated new payment, monthly savings, and months required to recover the closing costs.

Frequently Asked Questions

Does refinancing always save money?

No. Closing costs, the new term, rate, and how long you keep the loan all affect the result.

Why does the new loan term matter?

Resetting to a longer term can lower the payment while increasing the number of months you pay interest.

What costs should be included in the break-even calculation?

Include the closing costs and other upfront costs you actually expect to pay for the refinance. If a cost is rolled into the new loan instead, account for that financing separately because it can change the total cost.

This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.