Refinance Break-Even Calculator
Find out how long it takes to recoup closing costs — and if it's worth it
This calculator compares your current mortgage payment against a refinanced loan, factoring in closing costs, to show your monthly savings, break-even point, and total interest impact of refinancing.
Current Loan
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New Loan
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Current Payment (P&I)
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New Payment (P&I)
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Monthly Savings
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Break-Even Point
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Cumulative Cost: Current vs Refinanced
Remaining interest — current loan$0
Total interest — new loan$0
📖 Is Refinancing Actually Worth It?
A lower interest rate sounds like an automatic win, but refinancing isn't free — closing costs typically run 2-5% of the loan amount, and it takes time for lower monthly payments to actually recoup that upfront cost. The break-even point is the number that tells you whether refinancing makes sense for your situation.
The Break-Even Formula
Break-Even Months = Closing Costs / Monthly Payment Savings
If refinancing costs $6,000 in closing costs and saves $200/month, the break-even point is 30 months — about two and a half years. Refinancing only pays off if you stay in the home (or keep the loan) longer than that.
Why Your Payment Might Go Up, Not Down
A lower rate doesn't guarantee a lower payment. Two common reasons the new payment can be higher: a cash-out refinance increases the loan balance, adding back some or all of what the lower rate saved, and a shorter new term pays off the balance faster, which raises the monthly payment even though total interest usually falls.
The Hidden Cost of Resetting the Clock
If you're 5 years into a 30-year mortgage and refinance into a new 30-year loan, you're not just changing the rate — you're extending how long you'll be paying interest by 5 years. Even at a meaningfully lower rate, resetting to a fresh 30-year term can increase total interest paid over the life of the loan, despite lowering the monthly payment. Comparing total interest requires looking at the actual time horizon of each option, not just the payment.
💡 If you can afford it, refinancing into a term matching your remaining years (rather than resetting to a full new term) usually preserves more of the interest savings from a lower rate.
How Long You Plan to Stay Matters Most
The break-even point is really a bet on how long you'll keep the loan. If you might sell the home or refinance again before reaching break-even, the closing costs may never be fully recouped — which is why the break-even period matters as much as the rate difference itself.
❓ Frequently Asked Questions
What is a refinance break-even point?
The break-even point is how many months it takes for your monthly payment savings to add up to more than the closing costs you paid to refinance. Before that point, refinancing has cost you more than it has saved.
How is the break-even point calculated?
Break-Even Months = Closing Costs / Monthly Payment SavingsIf refinancing costs $6,000 and saves $200 per month, the break-even point is 30 months.
Why might my payment go up even with a lower rate?
A cash-out refinance increases your loan balance, which can offset or exceed the savings from a lower rate. A shorter new loan term can also raise the monthly payment even at a lower rate, since the balance is paid off faster.
Does a longer loan term always cost more in total interest?
Resetting to a new 30-year term after paying down an existing loan for several years extends how long you pay interest, which can increase total interest paid even at a lower rate, despite lowering the monthly payment.
How long should I plan to stay to make refinancing worth it?
As a rule of thumb, you should plan to stay in the home longer than the break-even period for the refinance to have been worthwhile. If you might sell or refinance again before the break-even point, the closing costs may not be recouped.