Refinance Break-Even Calculator
Find your refinance break-even point — the month your savings exceed closing costs. Know exactly how long you need to stay in your home for refinancing to be worthwhile.
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%
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$
yrs
yrs
Breakeven Point
25 months (2.1 years)
$248/month savings · you must stay 25 months to recoup costs
Current Payment
$1,972
New Payment
$1,724
Monthly Savings
$248
Closing Costs
$6,000
Total Savings (after breakeven)
$76,991
Total Cost (new loan)
$626,643
Advanced
Advanced Calculator
Cumulative savings chart over time, multiple rate scenario comparison
Cumulative net savings over time. The line crosses zero at the breakeven point (month 25).
| Year | Cumulative Savings | Net Position | Status |
|---|---|---|---|
| 1 | $2,973 | -$3,027 | Need 13 more months |
| 2 | $5,946 | -$54 | Need 1 more months |
| 3 | $8,918 | +$2,918 | In the green |
| 4 | $11,891 | +$5,891 | In the green |
| 5 | $14,864 | +$8,864 | In the green |
| 6 | $17,837 | +$11,837 | In the green |
| 7 | $20,810 | +$14,810 | In the green |
| 8 | $23,783 | +$17,783 | In the green |
| 9 | $26,755 | +$20,755 | In the green |
| 10 | $29,728 | +$23,728 | In the green |
| 11 | $32,701 | +$26,701 | In the green |
| 12 | $35,674 | +$29,674 | In the green |
| 13 | $38,647 | +$32,647 | In the green |
| 14 | $41,619 | +$35,619 | In the green |
| 15 | $44,592 | +$38,592 | In the green |
| 16 | $47,565 | +$41,565 | In the green |
| 17 | $50,538 | +$44,538 | In the green |
| 18 | $53,511 | +$47,511 | In the green |
| 19 | $56,484 | +$50,484 | In the green |
| 20 | $59,456 | +$53,456 | In the green |
| 21 | $62,429 | +$56,429 | In the green |
| 22 | $65,402 | +$59,402 | In the green |
| 23 | $68,375 | +$62,375 | In the green |
| 24 | $71,348 | +$65,348 | In the green |
| 25 | $74,321 | +$68,321 | In the green |
| 26 | $77,293 | +$71,293 | In the green |
| 27 | $80,266 | +$74,266 | In the green |
| 28 | $83,239 | +$77,239 | In the green |
| 29 | $86,212 | +$80,212 | In the green |
| 30 | $89,185 | +$83,185 | In the green |
Pro
Professional Simulator
NPV analysis (time value of money), stay-vs-sell decision model
%
NPV accounts for the time value of money — a dollar saved next year is worth less than a dollar saved today.
Net Present Value of Refinancing
+$35,320
Refinancing creates positive value at this discount rate
NPV of Refinancing
$35,320
At 6.0% discount rate
Simple Savings (no discount)
$76,991
Nominal dollar savings
Discount Rate
6.0%
Your opportunity cost
Upfront Cost
$6,000
Closing costs invested instead
Monthly Payment Savings
$248
Simple Breakeven
2.1 yrs
Without time value
How to Use This Refinance Break-Even Calculator
Enter your Current Loan Balance, Current Rate, and the New Rate you've been offered. Add your estimated Closing Costs (request a Loan Estimate from the lender for accurate figures) and your Current Years Remaining. Set the New Loan Term for the refinanced mortgage.
The break-even month is when cumulative savings from the lower payment equal total closing costs. If you plan to sell or move before that month, refinancing will cost you money overall.
Break-Even Calculation Formula
Monthly Savings = Current Payment − New Payment
Break-Even Months = Closing Costs ÷ Monthly Savings
Total Savings After Break-Even =
Monthly Savings × (New Term × 12 − Break-Even Months) − Closing Costs
Example: $200/month savings, $5,000 closing costs
Break-even = 5,000 ÷ 200 = 25 months (2.1 years)
Break-Even Months = Closing Costs ÷ Monthly Savings
Total Savings After Break-Even =
Monthly Savings × (New Term × 12 − Break-Even Months) − Closing Costs
Example: $200/month savings, $5,000 closing costs
Break-even = 5,000 ÷ 200 = 25 months (2.1 years)
Example: 7.25% to 6.25% Refinance
$280,000 Balance — Should You Refinance?
| Current Balance | $280,000 |
| Current Rate | 7.25% |
| New Rate | 6.25% |
| Remaining Term | 27 years |
| New Term | 30 years |
| Closing Costs | $6,000 |
| Current Payment | $1,916/mo |
| New Payment | $1,724/mo |
| Monthly Savings | $192/mo |
| Break-Even Point | 31 months (2.6 years) |
| Total Savings (after break-even) | ~$63,000 |
If you stay more than 2.6 years, refinancing is profitable. After break-even, you save $192/month for the remaining loan life — a significant long-term gain despite the upfront cost.
Frequently Asked Questions
The break-even point is when cumulative monthly savings from the new, lower payment equal your total closing costs. Before break-even, refinancing hasn't paid off. After break-even, every month saves you money. It's the key metric for deciding whether to refinance.
Refinancing typically costs 2–5% of the loan amount. On a $280,000 loan, expect $5,600–$14,000 in closing costs. Costs include origination fee (0.5–1%), appraisal ($400–$700), title insurance, recording fees, and prepaid interest. Always request a Loan Estimate to see exact costs from your lender.
Refinancing to a longer term lowers your monthly payment but resets your payoff date and can significantly increase total interest paid. For example, refinancing a 27-year remaining loan to a new 30-year adds 3 years and increases total interest even at a lower rate. Compare full loan costs, not just monthly payment.
The old "1% rule" is outdated. The actual threshold depends on your loan balance, closing costs, and how long you plan to stay. On a $400,000 loan, a 0.5% rate drop saves $215/month — enough to break even in under 2 years on $5,000 in closing costs. On a $150,000 loan, you need a bigger rate drop to make the same math work.
Each point costs 1% of the loan amount and typically lowers the rate by 0.25%. If you plan to stay long-term, paying points can reduce your rate enough to save more than the cost. But points extend your break-even timeline. Use this calculator with the point cost included in closing costs to see the full picture.