Mortgage Refinance Break-Even Calculator
Find out how many months until a refinance pays for itself.
Formula
About this calculator
Refinancing replaces your existing mortgage with a new loan, usually to get a lower interest rate or a different term. The catch is that refinancing is not free — you pay closing costs, often 2%–5% of the loan balance. The single most important question is therefore not "is the new rate lower?" but "how long until my monthly savings pay back those closing costs?" That is your break-even point.
The math is simple: divide your total closing costs by the amount you save each month. If refinancing costs $4,500 and lowers your payment by $250 a month, you break even in 18 months. Stay in the home past that point and every remaining month is pure savings; sell or refinance again before it, and you lose money.
This calculator compares your current payment against the new payment, then reports three things: your monthly savings, your break-even month, and your total savings if you keep the loan to term. Watch out for one trap — extending the term (say from 22 years left back out to 30) can lower the monthly payment while increasing total interest paid. Always check the lifetime number, not just the monthly one.
Frequently asked questions
What is a good break-even period for refinancing?
As a rule of thumb, if you will stay in the home well beyond the break-even point (often under 2–3 years is considered strong), refinancing usually makes sense.
Why did my total cost go up even though my payment went down?
Restarting the clock on a longer term spreads a smaller payment over more months, which can raise the total interest even at a lower rate. Compare lifetime interest, not just the monthly payment.
What counts as closing costs?
Typically application, origination and appraisal fees, title insurance and recording fees. Ask each lender for a Loan Estimate to see the full itemized total.
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⚠️ This tool provides estimates only and is not financial advice. Actual rates, fees and terms vary by lender and borrower profile.