Calculator
Refinance Break-Even Calculator
A lower rate isn't free — you pay closing costs up front to get it. This page tells you the month the savings overtake the costs, and what the refi does to your lifetime interest.
How this is calculated
The break-even month is closing costs ÷ monthly payment savings — the point where the money you've saved each month has repaid what the refinance cost you up front. Stay in the home past that month and the refi is winning; sell or refinance again before it and you paid fees for nothing.
But the monthly payment doesn't tell the whole story, and this is where refinance marketing earns its bad reputation: a new 30-year term restarts your amortization clock. Swapping 27 remaining years for a fresh 30 lowers the payment partly because of the better rate and partly because you're stretching the debt out longer — so we also show total remaining interest both ways, with closing costs counted. If the receipt says the refi costs more over its life, believe the receipt, not the payment.
A worked example
The defaults: $300,000 remaining at 7.25% with 27 years left (about $2,113/month P&I) refinanced to 6.25% over a new 30 years (about $1,847/month) with $6,000 in costs. The payment drops about $265/month, so break-even lands just under two years in — but the fresh 30-year term means the lifetime-interest gap is much smaller than the payment drop suggests. Try the same numbers with a 20-year new term and watch both lines move.
Common questions
What's a "no-closing-cost" refinance? The costs are still there — rolled into the balance or priced into a higher rate. Model it by adding them to the balance or using the higher rate; there's no fee fairy.
Should I pay points for a lower rate? Points are prepaid interest — add them to closing costs here and the break-even math prices them automatically.
Can I refi to the same remaining term? Often, yes (many lenders offer custom terms) — and it's the cleanest comparison: pick the term closest to your remaining years so you're comparing rate against rate, not term against term.
Principal & interest only — taxes and insurance don't change with a refi. General information, not financial or lending advice; get a real Loan Estimate before deciding. Found an error? Tell us and we'll fix it.