Refinance Break-Even Calculator
Find out how many months of lower payments it takes to recoup your refinance closing costs — the break-even before a refi actually pays.
How it works
Monthly saving = current payment − new payment · Break-even months = closing costs ÷ monthly saving · Net = saving × months held − closing costs
A refinance replaces one loan with another that has a lower payment, but the closing costs are paid up front. The break-even point is when accumulated monthly savings equal those costs. If you sell or refinance again before break-even, you lose money; the payoff only materializes for borrowers who keep the new loan long enough.
Worked example
Dropping the payment from $2,100 to $1,850 saves $250/mo. With $6,000 in closing costs, break-even is 6,000 ÷ 250 = 24 months. Stay 7 years and you net 250 × 84 − 6,000 = $15,000 in savings.
Frequently asked questions
What counts as refinance closing costs?
Lender origination fees, appraisal, title insurance, recording fees and any discount points — typically 2% to 5% of the loan. Rolling them into the balance still means you pay interest on them.
Does a lower rate alone mean I should refinance?
Not necessarily. If the closing costs take longer to recoup than you plan to keep the loan, a lower rate still loses money. Break-even, not the rate drop alone, is the deciding number.
Does extending the term change the picture?
Yes. A lower payment from a longer term can mean more total interest even at a lower rate. Compare lifetime interest, not just the monthly payment, when the new term is longer.
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Educational estimate, not financial advice. Confirm figures with your lender or a licensed professional.