Mortgage Refinance Break-Even Calculator

Why Break-Even Matters

Refinancing your mortgage can lower your monthly payment, but it comes with upfront costs (closing fees, points). The break-even point tells you how long it takes for your savings to cover those costs — helping you decide if refinancing makes financial sense.

How to Use This Calculator

Enter your current loan balance, current and new interest rates, remaining term, and refinance costs (including discount points). The tool calculates:

• Monthly interest savings
• Total refinance cost
• Break-even time in months and years

The Break-Even Formula

Where:

• Total Refinance Cost: Closing costs + Points
• Monthly Savings: Old payment – New payment

Real-World Applications

• Rate Drop: Save when market rates fall
• Term Adjustment: Switch from 30-year to 15-year
• Cash-Out: Tap home equity for renovations
• Remove PMI: Refinance once 20% equity is reached

When to Refinance

• Break-even occurs before you plan to sell
• New rate is at least 0.5–1% lower
• You plan to stay in the home longer than break-even period
• You can reduce term without increasing payment

Hidden Costs to Consider

• Appraisal fees
• Title insurance
• Origination fees
• Prepayment penalties (check current loan)

Example

You have a $250,000 loan at 6.5%. Refinancing to 5.0% saves $196/month. With $4,000 in closing costs, the break-even point is 20.4 months (~1.7 years). If you plan to stay 5+ years, refinancing is smart.