Refinance Break-Even Calculator
Refinancing trades closing costs today for a different payment tomorrow. The break-even point is how long it takes those monthly savings to cover what the refinance costs.
Your current loan
The new loan
Estimated break-even point
2 yr 2 mo
Monthly principal and interest would fall by about $231. Staying in the home past the break-even point is what makes the upfront cost worth recovering.
Payment comparison
| Measure | Current loan | New loan |
|---|---|---|
| Monthly P&I | $2,253 | $2,023 |
| Loan amount | $320,000 | $320,000 |
| Rate | 7.250% | 6.500% |
| Remaining term | 27 yrs | 30 yrs |
| Interest over the term | $410,108 | $408,142 |
The trade-off
- Monthly change
- −$231
- Cash due at closing
- $6,000
- Break-even
- 2 yr 2 mo
- Lifetime interest change
- −$1,966
- First-year payment savings
- $2,770
- Costs added to loan
- $0
A lower payment on a longer term can still increase total interest, because the balance is repaid over more years. Both numbers matter, and which one matters more depends on how long you plan to keep the loan.
Want to understand this number?
How this calculator works
The current payment is the standard principal-and-interest amount for your balance at your current rate over the years remaining. The new payment uses the new rate and term, on the balance plus any closing costs you choose to roll in.
Break-even divides the cash you pay at closing by the monthly payment savings, giving the number of months of savings needed to recover that cash. Lifetime interest compares interest over each loan's full remaining term.
What it can't tell you
- Refinance pricing depends on credit, equity, occupancy, loan type, points and the day you lock — the rate here is an assumption.
- Break-even by payment savings ignores that a longer term restarts amortisation, so early payments go mostly to interest again.
- Cash-out refinances, buydowns, mortgage insurance changes and tax effects are not modelled.
- This tool cannot tell you whether refinancing is a good idea for your situation; it only shows the arithmetic of the numbers you enter.