Mortgage Refinance Break-Even Calculator
Find how many months it takes for a lower mortgage payment to repay refinance closing costs, plus the lifetime savings or cost of the new loan.
This calculator finds when cumulative mortgage-payment savings recover refinance closing costs. It accounts for each loan ending on its own schedule, including a shorter new loan with a higher payment. Check the lifetime savings too: resetting to a longer term can cost more overall even if payments initially fall. Remaining equity and the time value of money are not included.
How to use this tool
- Enter your current balance, rate and the years left on the loan.
- Enter the new rate and term from the lender's Loan Estimate.
- Enter the total closing costs, including any points.
- Read the break-even point and check the lifetime savings line.
Formula
Break-even (months) = Closing costs ÷ (Current payment − New payment)
The simple division applies only while both loans are active. More generally solve min(t, old term) × old payment − min(t, new term) × new payment = costs. Each payment uses M = P × r ÷ (1 − (1 + r)^−n), or P ÷ n at 0%. Lifetime savings compare all remaining payments and closing costs.
Example
A $300,000 balance at 7.25% with 27 years left costs $2,112.58 a month. A new 30-year loan at 6.25% drops that to $1,847.15, saving $265.43 a month. With $6,000 of closing costs the break-even point is 6,000 ÷ 265.43 = 22.6 months, about 1 year 11 months. Because the new loan adds three years of payments, the lifetime saving is about $13,502 after costs, far less than the $86,000 the monthly saving alone suggests.
Frequently asked questions
What is a good break-even point?
There is no single number, but it should be well inside the time you expect to stay in the home. Many people look for two to three years or less, since moves and future refinances often come sooner than planned.
What if I roll the closing costs into the new loan?
You still pay them, just over time and with interest, through a slightly higher new payment. This calculator assumes the costs are paid at closing. Financing them shrinks the monthly saving a little and pushes the break-even point back, so use the payment on your Loan Estimate if it already includes them.
Why are my lifetime savings negative?
If the new term is longer than the years you have left, you make more payments in total. Choose a shorter new term, or plan to pay extra each month, to keep the interest savings.
Sources
This tool gives an estimate for general information only. It is not financial, tax, legal or medical advice — check with a qualified professional before you rely on the result.
Last updated: 2026-10-30