Refinance Break-Even Calculator
Monthly savings, how long until closing costs pay for themselves, and whether the new loan actually costs less overall.
Break-even is closing costs divided by monthly savings: the point where refinancing has paid for itself. If you might move or refinance again before then, the refinance loses money regardless of the rate.
The headline number is simple: closing costs divided by monthly savings gives the month at which refinancing has paid for itself. Stay past that point and you are ahead; move or refinance again before it and you lost money regardless of how much better the rate looked.
Frequently asked questions
What is a good reason to refinance?
A meaningfully lower rate, shortening the term, or converting an adjustable rate to a fixed one. Cash-out refinancing to consolidate higher-rate debt can also make sense, though it converts unsecured debt into debt secured by your home.
How much do closing costs run?
Typically 2% to 5% of the loan amount, covering origination, appraisal, title, and recording fees. Lenders sometimes offer no-cost refinancing that folds the expense into a higher rate, which shifts the cost rather than removing it.
How much lower does the rate need to be?
The old rule of thumb was one full point, but the honest answer is whatever makes the break-even shorter than how long you will keep the loan. On a large balance, even half a point can pay back quickly.
Can I refinance into a shorter term?
Yes, and it is often the better move. A 30-year refinanced into a 15-year usually raises the payment while cutting total interest dramatically, because both the rate and the number of payments fall.
Related tools
Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.