Refinance Break-Even Calculator

Calculate exactly how many months it takes to recover your refinancing closing costs and see if refinancing is truly worth it.

Refinance Break-Even Calculator

Current Loan

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New Loan (Refinance)

Your Plans

Refinance Results

0

months

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Monthly Savings
$0/mo
Total Interest Saved (Full Term)
$0
Total Interest — Current Loan
$0
Total Interest — New Loan
$0
Closing Cost Recovered By
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How We Calculate It

functions

The Break-Even Math

We calculate your new Principal & Interest payment using the standard amortization formula. Then, we divide the closing costs by your monthly savings to find the exact crossover point where refinancing pays for itself.

Monthly Savings=Current P&I − New P&I
Break-Even Months=Total Closing Costs ÷ Monthly Savings
Total Interest=(Monthly P&I × Total Months) − Principal

Variables

  • savings
    Monthly SavingsCash freed up each month
  • receipt_long
    Closing CostsThe upfront investment to refinance
  • calendar_month
    Break-EvenMonths until investment is recovered

Built on Industry Standards

Our calculator uses the universal amortization equations utilized by major U.S. lenders to determine monthly payments and interest costs. Definitions align with consumer resources provided by the CFPB.

*Disclaimer: This tool is for educational and estimating purposes only. It does not constitute financial or legal advice. Actual refinance rates, closing costs, and savings will vary based on your lender, credit profile, and location.

Frequently Asked Questions

What closing costs should I expect when refinancing?expand_more

Closing costs for a refinance typically range from 2% to 5% of the loan amount. These costs cover services like the loan origination fee, appraisal, title insurance, credit report fees, and recording fees.

Source: CFPB
Should I roll closing costs into my loan?expand_more

Rolling closing costs into your new loan means you don't have to pay cash upfront. However, you will be paying interest on those closing costs for the entire life of the loan. This increases your monthly payment slightly and increases the total cost of the loan. It's a trade-off between upfront cash flow and long-term interest costs.

Does the break-even calculation change if I make extra payments?expand_more

Yes. If you make extra principal payments on your new loan, you will pay it off faster and save even more interest. However, your monthly mandatory savings remain the same, so your literal 'break-even' point (when cumulative monthly savings equal closing costs) is technically the same, but your overall wealth-building accelerates.

Is a 1% rate drop enough to justify refinancing?expand_more

The '1% rule' is a common myth. Whether a refinance is worth it depends entirely on your closing costs and how long you plan to stay in the home. A 0.5% drop could be worth it if you plan to stay 15 years, while a 2% drop might be a terrible idea if you plan to move next year. Use this calculator to find your exact break-even point.

What's a No-Cost Refinance?expand_more

In a 'no-cost' refinance, the lender covers your closing costs in exchange for charging you a higher interest rate than you would have otherwise received. Your break-even point is essentially instant (since you paid $0 upfront), but your monthly savings will be much smaller. This is a good option if you plan to move in a few years and don't want to risk paying upfront closing costs you won't recover.

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