Refinance Break-even Calculator
Refinancing is a trade: upfront closing costs versus a lower monthly payment or shorter term. This page is built around the break-even question—how many months of savings repay the cost of the loan?
Quick answer
Enter current balance, current rate/payment, new rate, new term, and estimated closing costs. Months-to-break-even ≈ closing costs ÷ monthly savings (simplified; your tool handles amortization detail).
For a related estimate, see 20 Percent Down Calculator.
Explore further: Biweekly Mortgage Calculator · Closing Cost Calculator
How to use this calculator
- Document current loan: Balance, remaining term, and payment (P&I) from your statement.
- Model the new offer: Use the quoted rate and term—watch for points that change closing costs.
- Include closing costs: Roll-in vs out-of-pocket changes break-even—run both if unsure.
Break-even intuition
If you save $180/mo and pay $4,500 to close, rough break-even is 25 months before savings offset costs—then every month after is net positive until you move or pay off (illustrative formula).
Explore further: Debt To Income Calculator · Down Payment Calculator
Real-world example
- Example: $4,200 closing, $165/mo payment drop: Break-even ≈ 25–26 months. If you might move in 18 months, refinance may not pay (illustrative).
Explore further: Home Affordability With Taxes · Home Loan Calculator
What this means
If you will move or pay off before break-even months, the refi loses on net cash even if the monthly bill drops—treat break-even as a hard go/no-go gate, not a nice-to-have.
FAQ
Should I ignore break-even if I shorten the term?
Payment may not drop much, but total interest can fall. Compare interest savings and timeline, not payment alone.
Do I need a new appraisal?
Often yes for conventional refis—cost belongs in closing assumptions.
Is this a loan commitment?
No. Outputs are educational estimates. Final payments, APR, and fees come from your lender’s disclosures.
Why does my amortization schedule differ slightly?
Rounding, day-count conventions, and first-payment timing shift pennies. Use the schedule for directionally correct totals.