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Loans & Refinance calculator

Mortgage Refinance Break-Even Calculator

Find out how many months it takes to recoup your closing costs after refinancing, and your true lifetime savings.

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A refinance break-even calculator shows how many months of lower payments it takes to recover the closing costs of replacing your current mortgage with a new one. Refinancing swaps your existing loan for a new loan at a new rate and term, and the swap is not free — origination, appraisal, title, and recording fees typically add up to several thousand dollars. The break-even point is the month your accumulated monthly savings finally equal those costs. Keep the new loan past that month and the refinance is saving you money net of what it cost; sell, move, or refinance again before it and you paid more in fees than the lower rate returned.

This tool reports two numbers, and the second matters as much as the first: the break-even month, and the lifetime interest difference between keeping your current loan and riding the new one to the end, net of closing costs. As the worked example below shows, those two can disagree — a refinance can break even on the monthly payment and still lose money over the life of the loan.

How it's calculated

The break-even point is a simple ratio:

Break-even months = closing costs ÷ (current payment − new payment)

Both payments come from the standard annuity formula, Payment = P · r / (1 − (1 + r)−n), applied to the same balance — your current loan over its remaining months, and the new loan over its full term. For the lifetime figure, the calculator builds the complete amortization schedule for each loan and compares total remaining interest on the current loan against total interest on the new one, then subtracts closing costs. Full formulas are on our methodology page. For what the closing costs themselves consist of and who pays them, the CFPB's explainer on mortgage closing fees is the primary reference.

Worked example: $280,000 at 7.25% with 27 years left

Take the calculator's default scenario: a $280,000 balance at 7.25% with 27 years remaining and $6,000 in closing costs. The current payment is $1,971.74, and riding out the current schedule costs $358,845 in further interest. Here is what a range of new-loan offers does, computed with the same engine as the tool above:

New loan New payment Monthly savings Break-even Lifetime result (net of costs)
6.75% / 30 yr$1,816.07$155.6739 mo−$20,942
6.50% / 30 yr$1,769.79$201.9530 mo−$4,280
6.25% / 30 yr$1,724.01$247.7424 mo+$12,202
6.00% / 30 yr$1,678.74$293.0021 mo+$28,498
6.00% / 27 yr$1,747.16$224.5827 mo+$66,765

Two rows carry the whole lesson. The 6.50% offer breaks even on the payment in 30 months — yet loses $4,280 over the loan's life, because stretching a 27-year balance back out to 30 years adds three years of interest that the lower rate does not fully claw back. And compare the two 6.00% rows: the 30-year version saves more per month ($293.00 vs $224.58), but the 27-year version — matching your remaining term instead of resetting it — comes out $38,267 better over the life of the loan. Break-even tells you the minimum time to stay; the lifetime figure tells you what the refinance is actually worth. Enter your own balance, rates, and costs above to see both for your situation.

When should you use this calculator?

Use it when you have a real quote in hand — a Loan Estimate with a rate and itemized closing costs — and want to know the minimum time you would need to keep the loan for the refinance to pay for itself. It is equally useful for comparing competing offers: a lender charging higher fees for a lower rate and one charging lower fees for a higher rate produce different break-even months and different lifetime totals, and this tool reduces each offer to those two comparable numbers. A third use is testing term choices — run the same rate at a 30-year term and at a term matching your remaining years, and see how much of the "savings" is really just a longer loan.

The calculator answers the cost question: how long until the fees are recovered, and what the swap does to total interest. It does not know how long you will actually stay in the home, where rates go next, or whether the cash spent on closing costs has a better use — those judgments stay with you.

Assumptions and limitations

  • Payments compared are principal and interest only. Escrow items — property taxes, homeowners insurance, PMI — are excluded and continue regardless of the refinance.
  • Break-even is computed from the payment difference, out of pocket. Rolling closing costs into the new balance is not modeled; doing so means you finance the fees, pay interest on them, and push the true break-even later.
  • Both rates are assumed fixed. Adjustable-rate loans, temporary buydowns, and points-for-rate trade-offs beyond what you fold into the inputs are not modeled.
  • The lifetime figure assumes you keep the new loan to the end of its term with no extra payments. If you sell earlier, the break-even month is the more relevant number.
  • If your current loan has a prepayment penalty, add it to closing costs — the CFPB explains how prepayment penalties work.
  • Tax effects, such as changes to deductible mortgage interest, are not modeled.

This page is educational content about how refinance break-even math works. It is not financial advice and does not consider your personal circumstances. For decisions that matter, consult a qualified professional.

Last reviewed: 2026-07-09

Frequently asked questions

What is the break-even point on a refinance?
The break-even point is the number of months it takes for your accumulated monthly savings to equal the closing costs you paid to refinance. It is calculated as closing costs divided by the reduction in your monthly payment. For example, if refinancing costs $4,000 and lowers your payment by $200 a month, you break even in 20 months. If you keep the loan past that point, the refinance starts saving you money net of costs; if you sell or refinance again before then, you may not recoup the costs.
When is refinancing not worth it?
Refinancing often is not worth it if you plan to move or sell before reaching the break-even point, since you would not recoup the closing costs. It can also cost more over time if you reset back to a fresh 30-year term, because stretching the balance over more years can increase total interest even at a lower rate — compare lifetime interest, not just the monthly payment. Rolling closing costs into the loan balance avoids out-of-pocket cost but means you pay interest on those costs and extends your break-even.
What is a good rule of thumb for when refinancing makes sense?
The traditional heuristics say a refinance is worth investigating when the new rate is 0.5 to 1 percentage point below your current one. Rules of thumb are only a screen, though — the actual test is the break-even calculation: closing costs divided by monthly savings gives the months needed to recoup the fees, and you compare that against how long you realistically expect to keep the loan. A big balance can make a 0.375-point drop worthwhile; a small balance may not justify even a full point once fees are counted. Run the real numbers rather than the rule.
How much does it cost to refinance a mortgage?
Refinance closing costs commonly run about 2% to 6% of the loan amount, varying by lender, state, and loan size. The Consumer Financial Protection Bureau lists the typical components: loan origination fees, the appraisal, title search and title insurance, credit report and recording fees, and prepaid items such as property taxes, homeowners insurance, and interest to your first payment. Some lenders offer "no-closing-cost" refinances that recover the fees through a higher rate or a larger balance instead — the costs are still paid, just less visibly, which extends the true break-even.
Why can refinancing cost more overall even at a lower rate?
Because a lower rate on a longer clock can lose to a higher rate on a shorter one. If you are several years into a 30-year loan and refinance into a fresh 30-year term, you stretch the remaining balance across extra years of interest that the rate cut may not offset. For example, moving a $280,000 balance from 7.25% with 27 years left into a 6.5% 30-year loan lowers the payment by about $202 a month and breaks even on fees in 30 months — yet still costs about $4,280 more over the life of the loan. Matching the new term to your remaining years avoids the reset.

Extra-Payment Loan Payoff

Add extra principal to any loan and see your new payoff date, interest saved, and a complete amortization schedule.

Amortization Schedule

Build the full amortization schedule for any fixed-rate loan: monthly payment, year-by-year principal and interest breakdown, and a complete month-by-month table.

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