Refinance break-even calculator
Compare payments, upfront costs, and the time needed to recoup closing costs.
Your numbers
Rates shown are editable examples, not current offers.
Monthly payment reduction
$366Principal and interest only; closing costs are paid upfront.
- Current P&I payment
- $2,465
- New P&I payment
- $2,098
- Simple payment break-even
- 17 months
- 5-year interest-and-fee savings
- $15,058
- Current loan balance after 5 years
- $324,773
- New loan balance after 5 years
- $325,690
Understand this estimate
Assumes the existing balance is refinanced with no cash out, and all closing costs are paid in cash. Both loans use fixed rates and monthly payments. Payment savings exclude taxes, insurance, and mortgage insurance. Simple break-even divides upfront costs by monthly payment savings; it does not account for principal differences, time value of money, or tax effects. The holding-period comparison uses interest paid plus upfront costs and separately shows the remaining balances. No future rate is predicted.
How the calculation works
The calculator computes two fixed-rate principal-and-interest payments on the same balance: your current loan over the years it has left, and the new loan over the term you choose. The difference is your monthly payment change.
The simple break-even is your upfront refinance costs divided by the monthly savings, rounded up to whole months. Because a lower payment can come from stretching repayment over more years, the calculator also totals the interest you would pay on each loan over the years you expect to keep it, adds the upfront costs to the new loan, and shows what you would still owe on each.
Worked example: refinancing $350,000
A $350,000 balance at 7.25% with 27 years left has a principal-and-interest payment of $2,464.68. Refinancing into a new 30-year loan at 6% lowers it to $2,098.43, a $366.25 monthly reduction. With $6,000 in upfront costs, the simple break-even is 17 months. Over five years, the new loan saves an estimated $15,058 in interest after paying those costs, but it would leave you owing $325,690 compared with $324,773 on the current loan, because the new loan restarts a 30-year schedule.
Common questions
What is a refinance break-even point?
It is the number of months of payment savings needed to recover what you paid upfront to refinance. If you expect to sell or refinance again before then, the new loan may cost more than it saves.
Why compare remaining balances?
Extending the repayment period lowers the payment partly by spreading the debt over more years. Comparing what you would still owe after the years you plan to stay shows whether the lower payment also improves your overall position.
Which costs should I enter?
Use the upfront costs you would pay to refinance as shown on the lender’s Loan Estimate, including any discount points. The calculator assumes those costs are paid in cash rather than added to the loan balance.
Does this work for a cash-out refinance?
No. It assumes the new loan replaces the existing balance with no cash out. Borrowing more changes the balance, the payment, and the comparison.
Related guides
Put the numbers in context.
A lower payment is not the same as a lower total cost. Compare balances and interest over the time you expect to keep the loan.
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