Refinance break-even calculator
Find out how many months it takes for a refinance’s monthly savings to pay back its closing costs.
These calculators are for illustration only and aren’t an offer of credit or a loan estimate. They estimate principal and interest only; taxes, insurance and mortgage insurance aren’t included. By refinancing an existing loan, your total finance charges may be higher over the life of the loan.
The break-even formula
Break-even (months) = total closing costs ÷ monthly savings. If a refinance costs $5,000 and lowers your principal-and-interest payment by $176, it takes about 29 months for the savings to cover the cost. Every month after that is money ahead, as long as you keep the loan.
This simple version ignores one thing: if your new loan starts a fresh 30-year term, you pay down principal more slowly at first. For a fuller picture that counts the balance you’d still owe, use the refinance calculator.
What to include in closing costs
Count the lender’s fees, any discount points, the appraisal, title insurance and settlement fees, and recording fees or mortgage taxes (these vary a lot by state; see your state’s page). Leave out prepaid interest and new escrow deposits; you’d pay those, or get them back from your old escrow account, either way.
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Frequently asked questions
What is a good break-even point for a refinance?
The CFPB’s home loan toolkit suggests a refinance is generally worth considering if you break even in about two years. The real test is whether you’ll keep the loan well past your break-even month.
Does a no-closing-cost refinance have a break-even?
A no-closing-cost refinance usually means the lender pays your costs in exchange for a higher rate. There’s little to recoup, but you give up some monthly savings for as long as you keep the loan.
Go Direct Lenders, LLC DBA Veterans Direct | NMLS ID 1028986 | Equal Housing Opportunity. Not affiliated with the Department of Veterans Affairs or any government agency. By refinancing an existing loan, the consumer’s finance charges may be higher over the life of the loan.