Refinance Break-Even Calculator
Should you refinance? See how many months it takes to earn back your closing costs, and what you really save.
How the break-even point works
Refinancing usually costs money up front: lender fees, appraisal, title charges, and more. The break-even point is the number of months it takes for your monthly savings to add up to those closing costs. If you sell or refinance again before that point, you lose money on the deal. After it, every month of savings is a gain.
The formula is simple: closing costs ÷ monthly savings = months to break even.
When refinancing tends to make sense
- You'll stay in the home well past your break-even date.
- The new rate is meaningfully lower than your current rate.
- You're not resetting to a much longer term that raises your total interest.
- You're comfortable paying the closing costs out of pocket rather than rolling them into the loan.
Watch out for a longer term
A lower monthly payment can come from stretching the loan, not just from a better rate. If you have 25 years left and refinance into a new 30-year loan, your payment drops, but you may pay more in total interest. Try setting the new term equal to your years remaining to see the savings from the rate alone.
Frequently asked questions
What is a good break-even period?
Many homeowners look for a break-even of roughly two to three years or less, but the right answer depends on how long you plan to keep the loan.
Does this include taxes and insurance?
No. It compares principal and interest payments only, which is the part that changes when you refinance.
Is my information stored?
No. Everything is calculated in your browser. Nothing you enter is sent to or saved on our servers.
This calculator provides estimates for educational purposes only and is not financial advice. Actual savings depend on your lender's fees, rate, loan terms, and your circumstances. Talk to a licensed mortgage professional before you refinance.