Refinance Calculator
Compare your current mortgage against a refinance offer and find the exact break-even month.
Inputs
Origination fees, appraisal, title insurance, etc.
If checked, closing costs are added to the new loan balance.
Additional cash taken out at closing (added to new loan balance).
Monthly Payment Saving
$321.27
Break-Even Point
19months
How many months until cumulative savings exceed closing costs.
Current Payment
$2,168.42
New Payment
$1,847.15
Rate Reduction
1.000%
Out-of-Pocket Closing Costs
$6,000
New Loan Balance
$300,000
Current Loan — Total Interest
$350,526
New Loan — Total Interest
$364,975
Lifetime Interest Savings
-$8,448
Step by step
Current monthly payment
= $2,168.42
New loan balance
$300,000 + $0
= $300,000
New monthly payment
= $1,847.15
Monthly saving
$2,168.42 − $1,847.15
= $321.27
Break-even point
$6,000 ÷ $321.27/mo
= 19 months (1.6 years)
How it works
Refinancing replaces your current mortgage with a new loan, usually at a lower rate. The break-even point is the month when cumulative payment savings equal the closing costs you paid upfront. If you plan to stay in the home beyond that point, refinancing saves money. Resetting to a longer term reduces the monthly payment but can increase total interest paid — check the lifetime comparison when considering a 30-year refi on an existing 20-year loan.
Formula
Break-even months
Break-Even Months = Closing Costs ÷ (Current Payment − New Payment)
- Closing Costs
- Out-of-pocket fees at refinance closing
- Current Payment
- Existing monthly P&I
- New Payment
- New monthly P&I after refinance
Estimates assume fixed rates and do not include escrow changes, PMI recalculation or tax deductibility of mortgage interest. Consult a mortgage professional.
Frequently Asked Questions
What is the break-even point and why does it matter?
The break-even point is when your cumulative monthly savings equal what you paid in closing costs. If you sell or refinance again before that date, you lose money on the deal. If you stay beyond it, every subsequent month is net positive.
Should I roll closing costs into the new loan?
Rolling costs in eliminates the upfront payment but adds to the principal you pay interest on for years. It often makes sense for buyers who are short on cash, but it increases the total cost and slightly raises the monthly payment.
Is it worth refinancing for only a 0.5% rate reduction?
It depends on your balance, term and closing costs. On a $400k loan with $5,000 in closing costs and a 0.5% reduction, the break-even is often under 18 months. Run the numbers for your specific situation.
How does extending the term affect total cost?
Refinancing from a 25-year remaining term to a fresh 30-year term lowers the monthly payment but often increases total interest paid over the life of both loans — even at a lower rate. The 'Lifetime Interest Savings' figure in this calculator accounts for that difference.