Finance & Money
Mortgage Refinance Calculator
Use this refinance calculator to test whether a lower rate may offset closing costs before you refinance.
Break-even month
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- Monthly savings
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- Old payment estimate
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- New payment estimate
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Student quick launch
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Study path
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What a refinance break-even tells you
Refinancing replaces an existing mortgage with a new one, usually to get a lower rate or a different term. But refinancing has closing costs, so a lower payment only helps after those costs are recovered. This calculator estimates the old payment, the new payment (with costs rolled into the new balance), the monthly difference, and the break-even month.
The break-even formula
If a refinance costs $6,000 and lowers the payment by $150 per month, break-even is 6,000 / 150 = 40 months. Keep the loan longer than that and the payment savings have covered the costs; sell or refinance again sooner and they have not.
| Scenario | What happens to break-even |
|---|---|
| Bigger rate drop | Larger monthly savings, earlier break-even |
| Higher closing costs | More to recover, later break-even |
| Costs rolled into the loan | New balance grows, savings shrink, break-even moves later |
| New payment not lower | No payment-savings break-even exists |
Break-even is not the whole picture
- A new 30-year term restarts amortization, so early payments go back to being interest-heavy even at a lower rate.
- Total lifetime interest can rise even when the monthly payment falls, especially after years of paying down the original loan.
- How long you plan to keep the home is often the deciding input: a quick break-even matters little if you move first.
$300,000 balance, 7% to 6%, $6,000 in costs
With rates used here as illustration only: the old 30-year payment is about $1,996. Rolling $6,000 into a new $306,000 loan at 6% gives roughly $1,835. Monthly savings are about $161, so break-even lands near month 38 — a bit over three years.
How to use it
- Enter current balance and rate.
- Enter new rate, term, and costs.
- Compare break-even with how long you expect to keep the loan.
How to read the answer
If you sell or refinance again before break-even, payment savings may not recover the costs.
Common mistakes and edge cases
- A lower rate does not guarantee lower lifetime interest.
- Rolling costs into the loan increases the balance.
- Changing term length changes the comparison.
Worked examples
Lower-rate refinance
Break-even month
38 months
No-savings case
Break-even month
Error
Frequently asked questions
What is refinance break-even?+
It is how long payment savings take to recover refinance costs.
Should I refinance if I break even quickly?+
It may be worth studying, but also compare total interest, term length, and plans to move.
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Last updated: May 8, 2026