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Refinance Break-Even Calculator

Compare your current loan with a refinance. See the new payment, the break-even point where savings repay the closing costs, and the net savings over the years you expect to stay.
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Often 2% to 5% of the loan. Paid in cash in this calculator.

Break-even point

2 years 2 months

$236.47 a month saved repays $6,000 in closing costs

  • Current payment$2,138.60
  • New payment$1,902.13
  • Monthly savings$236.47
  • Net savings after 7 yearsInterest saved over that period minus closing costs$13,475
  • Interest paid in 7 years: current loan$150,638
  • Interest paid in 7 years: new loan$131,163
  • Lifetime interest: current loan$418,573
  • Lifetime interest: new loan$384,763

The new term is longer than what remains on your current loan. That lowers the payment but can raise total interest if you keep the loan to the end.

Does not include cash-out, points paid to lower the rate, or mortgage insurance changes. Both loans use the same balance.

Break-even point

2 years 2 months

Details

How the break-even point works

Refinancing costs money up front, usually 2% to 5% of the loan, and saves money each month through a lower payment. The break-even point is the number of months it takes for the monthly savings to repay those closing costs. If you will keep the loan, and the home, longer than that, the refinance pays off on a payment basis.

A second test is the interest you pay. The calculator compares the interest on your current loan and on the new loan over the years you plan to stay, then subtracts closing costs. That catches cases where restarting a 30-year term costs more in interest even though the payment drops.

When refinancing usually makes sense

A rule of thumb is a rate at least three-quarters to one percentage point lower, but the break-even point is a better guide than any rule. Refinancing is more attractive when closing costs are low, you will stay a long time, and you are not extending the term much.

  • You will stay past the break-even point.
  • The new term is not much longer than what remains on your current loan.
  • You can pay for closing costs in cash without draining your emergency fund.

Frequently asked questions

What are typical refinance closing costs?

They commonly run 2% to 5% of the loan amount and include lender fees, appraisal, title services and recording charges. Get a Loan Estimate from each lender to compare actual costs.

Can I roll closing costs into the new loan?

Often yes, which avoids paying cash up front but increases the balance and the interest you pay. This calculator assumes you pay closing costs in cash.

Does refinancing reset my loan term?

If you take a new 30-year loan, yes. You can choose a shorter term, or make extra payments, to avoid adding years of payments.

Related calculators

Extra paymentSee how much interest and time you save by paying extra each month or making a one-time lump-sum payment toward your mortgage principal.APRCalculate the APR of a mortgage including discount points and lender fees, and see how it differs from the interest rate on your note.Amortization scheduleSee every payment split into principal and interest, the balance by year, and how extra payments shorten the loan. Download the full schedule as CSV.

Estimates for education and planning only. TotalMonthly is not a lender or advisor; confirm figures with a licensed professional. See the methodology and disclaimer.