Refinance Break-Even Calculator

Calculates how many months a mortgage refinance takes to pay back its closing costs and points through a lower monthly payment. It also compares the total interest and total paid over the rest of the current loan and the new loan.

How to use

1. Under "Current loan", enter the "Balance owed now", "Current interest rate", "Years left" and, if needed, "Plus months".
2. Under "New loan", enter the "New interest rate" and "New loan term".
3. Enter the "Closing costs" and any "Discount points".
4. Read the "Break-even" time and the "Monthly saving", then compare both loans in "Over the rest of each loan".

How it works

• Break-even = (closing costs + points) ÷ monthly payment saving. One point is 1% of the loan amount, paid up front.
• Both payments are principal and interest on the balance you owe now, with fixed rates. Property tax, insurance and PMI are left out because a refinance does not change them.
• A longer new term can lower the payment and still raise the total interest; the page warns when this happens. This is a planning estimate, not a loan offer.

Questions and answers

How do I calculate the break-even point on a refinance?

Divide the upfront cost by the monthly saving. With 6,000 in closing costs and a payment that is 200 lower, the break-even point is 30 months.

Should I refinance if I plan to move soon?

If you sell or pay off the loan before the break-even point, the payment savings do not cover the upfront costs. Compare the break-even time with how long you expect to keep the loan.

Can a lower payment still cost more in total?

Yes. Restarting with a longer term spreads the balance over more payments, so the total interest can rise even at a lower rate. The comparison table shows the total paid for both choices.

Are discount points worth paying?

Points lower the rate but add to the upfront cost, which pushes the break-even point later. Enter the points to see how the break-even time and total cost change.