Mortgage Refinance Calculator
Refinance break-even.
Is refinancing worth the closing costs?
How the Math Works
The Mortgage Refinance Break-Even Calculator determines how long it takes for the savings from refinancing to equal the costs of the refinance. It compares your current monthly mortgage payment against the proposed new payment after refinancing, factoring in closing costs, fees, and any points paid. The break-even point is calculated by dividing the total refinance costs by the monthly savings, revealing the number of months needed to recoup your investment before you start profiting from the lower payments.
Practical Applications
To use this calculator practically, gather your current mortgage details including balance, interest rate, and monthly payment, then collect the terms of the refinance offer with its interest rate, new monthly payment, and total closing costs. Input these values to instantly see your break-even timeline. If you plan to stay in your home longer than this period, refinancing makes financial sense. For example, if closing costs are $5,000 and you save $200 monthly, your break-even point is 25 months - if you'll keep the mortgage for 5+ years, you'll save thousands.
Day-to-Day Use
This calculation protects your finances by preventing costly refinancing decisions you might regret. It helps you determine whether to refinance now or wait, especially useful when interest rates drop but you're unsure if you'll move before breaking even. The tool also guides conversations with financial advisors about the best timing for your situation, helping you maximize equity and minimize total interest paid over the life of your loan while aligning with your housing plans and budget.
FAQ
When to refi?
When savings × time > costs; rule of thumb: rate drop ≥1%.