Refinance break-even calculator
A refinance only pays off once the lower payment has repaid what the new loan cost you. Enter your current loan and the offer on the table to see the monthly saving, the number of months to break even, and what the switch does to your lifetime interest.
Your numbers
Break-even
| Current payment (P&I) | $2,645 |
| New payment (P&I) | $2,348 |
| New loan amount | $386,500 |
| Cost to refinance | $6,500 |
| Interest left on the current loan | $476,896 |
| Interest on the new loan | $458,929 |
You save $296 a month, so the $6,500 it costs to refinance is repaid after 1 yr 10 mo. If you expect to sell or refinance again before then, the switch loses money. Note that stretching the term back out lowers the payment but adds payments at the end, which is why the lifetime interest can rise even with a lower rate.
How to calculate your refinance break-even point
The arithmetic is simple: divide the total cost of the refinance by the amount your monthly payment drops. Closing costs of $6,000 against a $250 monthly saving is 24 months to break even. What trips people up is what belongs in each half. The cost side is every dollar the new loan charges you — lender fees, title, escrow, recording, points — minus any lender credit, whether you pay it at the table or roll it into the balance. The saving side must compare principal and interest to principal and interest; taxes and insurance are the same either way, so leaving them in both sides only muddies the number.
Why a lower payment isn't always a saving
Refinancing a loan you have already paid on for three years back into a fresh 30-year term lowers the payment partly because you have given yourself 36 extra months to pay. That is why this calculator asks for the months left rather than assuming a full term, and reports the lifetime interest alongside the monthly saving. If your goal is to be done sooner rather than to free up cash now, compare the new loan against a shorter term, or keep the term and put the saving straight back onto the principal.
When rolling costs into the loan makes sense
Rolling closing costs into the balance keeps cash in your pocket, and the break-even month barely moves, because you are still repaying the same costs out of the same monthly saving. What changes is the interest: those costs now sit in the loan earning interest for the whole term. Paying at the table is cheaper over the life of the loan; rolling them in is easier on your reserves today. Toggle the box above to see the difference for your numbers.