Mortgage Refinance Break-Even Calculator
Enter your current loan, the new rate and term, and the closing costs to see your monthly saving and how long the refinance takes to pay off.
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Compare a refinance with your current mortgage and find the break-even point.
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How to calculate your refinance break-even point
The break-even point is how long it takes for the monthly savings from a refinance to pay back the closing costs: break-even months = closing costs ÷ monthly savings. Example: you owe $300,000 at 7% with 28 years left and refinance into a 30-year loan at 6% with $6,000 of closing costs. The payment falls from about $2,039 to about $1,799, a saving of about $240 a month, so you break even in about 25 months (2.1 years). If you will keep the loan and the home longer than that, the refinance can make sense; if you will sell or refinance again sooner, it may not.
Break-even examples (30-year loans)
| Balance | Rate change (30-year terms) | Closing costs | Monthly savings | Break-even |
|---|---|---|---|---|
| $200,000 | 7% → 6% | $4,000 | $132 | 30 months |
| $300,000 | 7% → 6% | $6,000 | $197 | 30 months |
| $400,000 | 7.5% → 6.25% | $8,000 | $334 | 24 months |
| $300,000 | 6.5% → 6% | $6,000 | $98 | 62 months |
Things to check before you refinance
- Resetting the term: a new 30-year loan can lower your payment but increase the total interest you pay, as the calculator shows.
- Closing costs: ask for the full cost, including fees, appraisal and title charges.
- How long you will stay: the break-even only pays off if you keep the loan beyond it.
- Cash-out refinances work differently because they increase your balance.
Figures are estimates for fixed-rate loans and not financial advice; your lender’s Loan Estimate is what counts. See also the mortgage calculator and the mortgage payoff calculator.
How to use the refinance break-even calculator
- Enter your remaining balance, current rate and years left.
- Enter the new rate, the new loan term and the closing costs.
- Read the monthly saving, the break-even time and the total interest for both loans.
Frequently asked questions
How do I calculate the refinance break-even point?
Divide the closing costs by the monthly savings. With $6,000 of closing costs and about $240 a month saved, you break even in about 25 months.
Is it worth refinancing for 1% lower?
It depends on the closing costs and how long you will keep the loan. A 1% drop can pay back quickly on a large balance, but not if you plan to move soon. Check the break-even above.
Does refinancing into a new 30-year loan cost more interest?
It can, because you restart the term. Compare the total interest of both loans, shown in the results, and consider a shorter term if you can afford the payment.
What are typical closing costs on a refinance?
They vary by lender and loan size and often run a few thousand dollars or a percentage of the loan. Ask for a Loan Estimate to see the exact amount.
Does this include taxes and insurance?
No. It compares principal and interest only, which is what changes when you refinance.
Related tools: Mortgage calculator · Mortgage payoff calculator · HELOC calculator · Home equity loan calculator