Refinance Break-Even Calculator
A lower rate isn't automatically a good deal — closing costs have to be earned back first. Compare your current loan against a refinance offer to find your monthly savings and the month it starts paying off.
Refinance analysis
How it works
The break-even formula is simple: closing costs ÷ monthly savings = months to break even. Pay $6,000 to save $200/month and you're in the black after 30 months. Sell or move before that, and the refinance cost you money.
But the monthly payment isn't the whole story. Refinancing into a new 30-year loan restarts the amortization clock — early payments are interest-heavy again, so you can end up paying more total interest despite the lower rate. That's why this calculator also shows total interest saved: if that number is negative while the payment drops, you're trading long-term cost for short-term cash flow.
The cleanest refinance is a lower rate without extending the term — or even shortening it. A 15-year refinance at a lower rate often saves six figures in interest, if the higher payment fits your budget.
Frequently asked questions
What is the break-even point of a refinance?
The number of months it takes for your monthly savings to cover the closing costs. Divide total closing costs by monthly savings: $6,000 in costs ÷ $200/month savings = 30 months to break even.
What is a good break-even period for refinancing?
Generally, if you'll stay in the home well past the break-even point — often 2–4 years — refinancing makes sense. If you might sell or move before break-even, you'll lose money.
How much lower should rates be to refinance?
The old rule of thumb was 1%, but with today's math even 0.5–0.75% can work if closing costs are low and you'll stay put. Run the numbers rather than following rules of thumb.
Does refinancing restart the clock on my mortgage?
A new 30-year loan resets your payoff timeline, which can mean paying more total interest even at a lower rate. Compare total interest, not just the monthly payment — or choose a shorter term.
What are typical refinance closing costs?
Usually 2–5% of the loan amount, similar to a purchase — origination, appraisal, title, and recording fees. Some lenders offer low- or no-closing-cost refis at a slightly higher rate.
Can I refinance with little equity?
Rate-and-term refinances generally need some equity; cash-out refis need more. FHA streamline and VA IRRRL programs let eligible borrowers refinance with less paperwork and no appraisal in many cases.
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