Refinance break-even calculator
Months until a refinance pays for its closing costs.
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How it's calculated
Both payments come from the standard amortization formula: the balance times the monthly rate, divided by one minus (1 + rate) to the power of minus the number of payments. The difference is what the refinance saves each month, and the closing costs divided by that saving, rounded up, is the number of months until you are ahead. The two interest totals show the other side of the trade: a lower payment stretched over a new 30 years can cost more interest in total than finishing the loan you have, which is why the net saving over your stay matters more than the monthly figure.
When is refinancing worth it?
When you will stay well past the break-even point and the total interest does not rise more than the savings justify. The old rule of thumb was a rate drop of 1%; with today's closing costs, a drop of 0.5–0.75% can work if you stay five years or more, and a smaller drop rarely does.
Should I refinance into another 30-year loan?
It lowers the payment most but restarts the clock, so lifetime interest can go up even at a lower rate. Compare the two interest figures here. A 15- or 20-year refinance, or paying the old payment amount on the new loan, keeps the payoff date and captures most of the saving.
What about no-closing-cost refinances?
The costs are still paid, either rolled into the balance or through a higher rate. Enter the rolled-in amount as closing costs, or enter the higher rate as the new rate with costs of zero; the break-even then shows as the smaller monthly saving.
Results are estimates for informational purposes only and are not financial, medical or legal advice.