Refinance Break-Even Calculator
Thinking about refinancing your mortgage? Find out your new monthly payment, how much you'd save each month, and exactly how long it takes to break even on the closing costs — so you can decide whether refinancing is actually worth it. Free, private, and instant.
| Current loan | New loan | |
|---|---|---|
| Monthly payment (P&I) | — | — |
| Term remaining | — | — |
| Interest still to pay | — | — |
| Total still to pay | — | — |
Disclaimer: This calculator provides estimates for educational purposes only and is not financial advice. It compares principal & interest only and assumes fixed rates and on-time payments. It does not include taxes, insurance, PMI, or the interest already paid on your current loan. Your actual savings depend on your lender's terms — always review a Loan Estimate before refinancing.
How to calculate your refinance break-even point
The break-even point is the moment your accumulated monthly savings finally equal what you paid in closing costs. The math is simple:
Break-even (months) = Total closing costs ÷ Monthly payment savings.
For example, if refinancing costs $6,000 and your monthly payment drops by $250, you break even in 24 months. Stay in the home longer than that and refinancing puts money in your pocket; sell or refinance again before then and you lose money on the deal. The calculator above does this instantly and also shows your break-even date.
Is refinancing worth it?
Refinancing is usually worth it when three things are true: (1) your new rate is meaningfully lower, (2) you'll keep the loan well past the break-even point, and (3) the closing costs are reasonable relative to your savings. A lower rate alone isn't enough — a small drop on a small balance can take many years to recoup. Always weigh the break-even point against how long you realistically plan to stay.
Watch out for resetting your loan term
Refinancing a loan with 27 years left into a fresh 30-year loan lowers your monthly payment, but it also stretches your debt back out. You can pay more total interest over time even while paying less each month. That's why this calculator shows both your monthly savings and your lifetime interest — look at both before deciding. Refinancing into a shorter term (say 15 years) often raises the payment but saves the most interest overall.
Understanding closing costs
Refinance closing costs typically run about 2%–5% of the loan amount and can include origination or lender fees, an appraisal, title insurance, and recording fees. You can pay them up front or, on many loans, roll them into the balance (use the checkbox above to model that). Rolling costs in avoids out-of-pocket cash but means you pay interest on those costs for the life of the loan.
What about a "no-closing-cost" refinance?
A no-closing-cost refinance doesn't make fees disappear — the lender either adds them to your balance or charges a slightly higher interest rate to cover them. It can make sense if you won't stay long enough to break even on paid-up-front costs, but you'll usually pay more over the full term. Compare the true rate and payment, not just the "no cost" label.
Frequently asked questions
How do you calculate a refinance break-even point?
Divide your total closing costs by your monthly payment savings. If refinancing costs $6,000 and lowers your payment by $250/month, you break even in 24 months. After that, the refinance saves you money as long as you keep the loan.
What is the 2% rule for refinancing?
An old rule of thumb said to refinance only if you could cut your rate by at least 2%. It's outdated — calculate your actual break-even instead. Even a smaller rate drop can be worth it on a large balance with low closing costs.
How many years should a refinance take to break even?
There's no single number, but many people aim to break even within 2–4 years and to stay in the home well beyond that. If you might move or refinance again before breaking even, it usually isn't worth it.
Is it worth refinancing from 7% to 6%?
Often yes, especially on a larger balance — a 1% drop can lower your payment noticeably. The real test is whether your monthly savings recoup the closing costs before you sell or refinance again. Check your exact break-even point above.
Does this calculator include taxes and insurance?
No. It compares principal and interest only, which is what refinancing actually changes. Property taxes and homeowners insurance are largely the same regardless of your lender, so they're excluded to keep the comparison clean.
Planning to pay your mortgage off faster instead? Try our Mortgage Payoff Calculator to see how extra payments shorten your loan.