Current Loan
Remaining mortgage balance
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Your existing mortgage rate
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Years left on current loan
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Principal + interest only
Enter current payment.
New Loan
Rate you qualify for
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Length of new mortgage
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All fees: origination, appraisal, title, etc. (typically 2-5% of loan)
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Break-Even Point
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⚠️ Disclaimer: This calculator provides estimates for informational purposes only. Actual savings depend on your specific loan terms. Consult a licensed mortgage professional before refinancing.
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Sources & Methodology
Refinance calculations per CFPB mortgage guidelines and standard amortization formulas.
Consumer Financial Protection Bureau (CFPB) — Mortgage Refinancing Guide
Federal guidelines on mortgage refinancing, closing costs, and break-even analysis. consumerfinance.gov
Freddie Mac — Refinance Analysis Guidelines
Standard methodology for evaluating refinance economics and break-even calculations. freddiemac.com
Investopedia — Mortgage Refinance Break-Even
Standard break-even formula for mortgage refinancing decisions. investopedia.com
New Monthly Payment = P x [r(1+r)^n] / [(1+r)^n - 1]
where P = loan balance, r = monthly rate, n = term in months
Monthly Savings = Current Payment - New Payment
Break-Even Months = Closing Costs / Monthly Savings
where P = loan balance, r = monthly rate, n = term in months
Monthly Savings = Current Payment - New Payment
Break-Even Months = Closing Costs / Monthly Savings
Break-Even = Closing Costs / Monthly Savings
Example: $5,500 closing costs, $180/month savings.
Break-Even = $5,500 / $180 = 30.6 months (2 years 7 months).
If you stay longer than 31 months, refinancing saves you money.
Break-Even = $5,500 / $180 = 30.6 months (2 years 7 months).
If you stay longer than 31 months, refinancing saves you money.
Last reviewed: April 2026
How Is Refinance Break-Even Calculated?
The refinance break-even point answers the most important question in any refinancing decision: how long do I need to stay in my home to make refinancing worth it? The formula is straightforward — divide your total closing costs by your monthly payment savings. The result is the number of months you need to stay after refinancing to recoup the upfront cost.
For example, if refinancing saves you $200 per month but costs $5,000 in closing costs, your break-even is 25 months. If you plan to stay in the home for 5+ years, refinancing makes strong financial sense. If you might move in 18 months, it does not.
What Affects the Break-Even Point
- Rate difference: A larger rate drop = bigger monthly savings = faster break-even
- Loan balance: Larger balances benefit more from rate reductions in dollar terms
- Closing costs: Higher closing costs push the break-even point further out
- New loan term: Extending to a new 30-year term lowers payments but resets amortization
Break-Even by Rate Reduction — Reference Table
| Rate Drop | Monthly Savings on $300K | Break-Even at $6K Closing | 5-Year Net Savings |
|---|---|---|---|
| 0.25% | ~$45 | 133 months | Not recommended |
| 0.50% | ~$90 | 67 months | Marginal |
| 0.75% | ~$135 | 44 months | ~$2,100 |
| 1.00% | ~$180 | 33 months | ~$4,800 |
| 1.50% | ~$265 | 23 months | ~$9,900 |
| 2.00% | ~$350 | 17 months | ~$15,000 |
💡 The New 30-Year Trap: Refinancing a 22-year remaining mortgage into a new 30-year loan lowers your payment but adds 8 years of payments. Even at a lower rate, your total interest paid over the new term may be higher. Consider a 15 or 20-year refinance to save interest while lowering your rate.
When Does Refinancing Make Sense?
Refinancing generally makes financial sense when your break-even point is less than the number of months you plan to remain in the home. Financial advisors typically recommend refinancing when you can reduce your rate by at least 0.75% and your break-even is under 24 months. However, with larger loan balances, even a 0.5% reduction can be worthwhile if closing costs are low.
Frequently Asked Questions
The break-even point is how many months until your monthly savings equal your closing costs. Break-Even = Closing Costs / Monthly Savings. After this point every month of lower payments is pure savings.
Divide total closing costs by monthly payment savings. Example: $4,000 closing costs divided by $150 monthly savings = 26.7 months break-even. If you stay at least 27 months, you come out ahead.
At $100/month savings with $3,000 closing costs, break-even is 30 months. If you stay 5+ years, you net $3,000 in savings. If you move in 2 years, you lose $1,600. It entirely depends on how long you plan to stay.
Typically 2-5% of the loan amount. On a $300,000 loan expect $6,000-$15,000 covering origination fee, appraisal ($300-500), title insurance, recording fees, and prepaid interest. Shop multiple lenders to compare.
Rarely. With 10 years left most payments are principal. A new 30-year loan restarts amortization and can cost significantly more total interest even at a lower rate. A 10-year refinance preserving your payoff date makes more sense.
Closing costs are rolled into the loan balance or paid via a slightly higher rate. No upfront cash needed but your loan balance grows or monthly payment is slightly higher. Total cost is usually more over the loan life but break-even is immediate.
Old rule was 1%, but it depends on your loan size. On a $500K loan, 0.5% saves ~$150/month and could break even in 20 months. On a $100K loan, even 1% saves only $60/month. Always calculate your specific break-even.
Yes, refinancing into a new 30-year mortgage restarts amortization. You may pay more total interest even at a lower rate. To avoid this, refinance into a term equal to your remaining years or consider a 15-year mortgage.
A 1% rate reduction on a $300,000 mortgage saves roughly $150-180/month or $54,000-$65,000 over 30 years before closing costs. Net savings depend on how long you keep the loan and your closing cost amount.
Conventional refinance minimum is 620. For the best rates you typically need 740+. FHA streamline refinances may allow 580+. Higher scores qualify for lower rates which improves your break-even calculation significantly.
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