Refinance Break-Even Calculator
A refinance trades closing costs now for a lower payment later. The break-even point is how long you need to keep the new loan before the monthly savings repay those costs.
Enter your figures below. Results update as you type.
Break-even point1 yr 11 moSaving $265.43 a month
- Current payment
- $2,112.58
- New payment
- $1,847.15
- Closing costs
- $6,000.00
- Lifetime saving after costs
- $13,501.99
Current loan vs. new loan
Keep current loan
$2,112.58Monthly payment
Nov 2053Pay-off date
$384,476.57Interest still to pay
Refinance
$1,847.15Monthly payment
Nov 2056Pay-off date
$364,974.58Interest to pay
You need to keep the new loan for at least 1 yr 11 mo for the refinance to pay for itself.
How the Refinance Break-Even calculation works
Break-even months = closing costs / monthly saving
Refinancing a $300,000 balance from 7.25% with 27 years left to 6.25% over 30 years cuts the payment from $2,112.58 to $1,847.15. With $6,000 of closing costs, the saving of $265.43 a month pays them back in 1 year 11 months.
Frequently asked questions
When is it worth refinancing a mortgage?
When you will keep the loan past the break-even point. If closing costs are $6,000 and you save $265 a month, that is about 23 months. Planning to move sooner means the refinance loses money.
Does refinancing restart my loan?
Yes, unless you choose a shorter term. Moving from 27 years remaining to a new 30-year loan lowers the payment but adds three years of interest. Choosing a term close to what you have left avoids that.
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