Refinance break-even calculator
Plug in your current loan and the new offer. We'll show you how much you save each month, when the closing costs pay for themselves (the break-even month), and the net savings over the life of the new loan.
What is the break-even month?
A refinance only pays off if you keep the loan long enough for the monthly savings to cover the closing costs. The break-even month is when those savings catch up with what you spent at closing — every month after that is pure profit.
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What break-even really means
Refinancing is not free — you pay closing costs to get a new loan. The break-even point is the month when your accumulated monthly savings finally equal those upfront costs. Before break-even you are still behind on the refinance; after it, every month is pure savings.
That single number — the break-even month — is the heart of any refinance decision. If you will move or sell before you reach it, refinancing costs you money. If you will stay well past it, it pays off.
A worked example
Say you owe $300,000 at 7.5% on a 30-year loan, and you can refinance to 6.5% with $6,000 in closing costs.
- Your payment drops from about $2,098 to $1,896 — a savings of roughly $201 a month.
- It takes about 30 months — two and a half years — for that $201 a month to recoup the $6,000 in closing costs.
- Stay five years and you are ahead by about $6,086, even after paying the closing costs.
If you plan to keep the home longer than the break-even point, the refinance is working for you. The calculator above runs these numbers for your exact loan and offer.
What to watch beyond the monthly payment
A lower monthly payment is only part of the story. A few things can quietly change the math:
- Resetting the term: refinancing a loan you are 8 years into back to a fresh 30 years can lower the payment but increase total interest. Compare total interest, not just the monthly number.
- Rolling closing costs into the loan: it avoids cash upfront but adds to the balance and the interest you pay.
- How long you will stay: the break-even month only pays off if you keep the loan past it.
Enter your real closing costs and the term you actually plan to keep the loan above to see your true net savings.
Frequently asked questions
What is the refinance break-even point?
It is the number of months it takes for your monthly savings to add up to the closing costs you paid. After that point, the refinance starts saving you money. On a typical loan with $6,000 in costs and about $200 a month in savings, break-even is around 30 months.
Is refinancing worth it if I will move soon?
Usually not. If you sell or move before reaching the break-even point, you will have paid more in closing costs than you saved. The calculator shows your break-even month so you can weigh it against how long you plan to stay.
How much does a 1% lower rate save?
On a $300,000 30-year loan, dropping from 7.5% to 6.5% lowers the payment by about $200 a month. Over the years you keep the loan that adds up quickly — but you have to clear the closing costs first before it becomes net savings.
Should I roll closing costs into the new loan?
It avoids paying cash upfront, but it increases your balance and the interest you pay over time. If you can cover closing costs out of pocket, your break-even comes sooner. Try it both ways in the calculator above.
Does refinancing reset my loan term?
It can. Refinancing into a new 30-year loan restarts the clock, which lowers the payment but can raise total interest if you were several years into the old loan. Compare total interest — not just the monthly payment — to see the real effect.