Mortgage Refinance Break-Even Calculator
Enter your current mortgage, your new loan offer, and closing costs to see your exact break-even point calculated four different ways — plus new payment, total interest saved, and a year-by-year payoff comparison.
Current Mortgage
New Loan Offer
Refinance Analysis
Bars turn teal once cumulative savings cross your closing costs. Hover any bar for details.
How your current and new payments split between principal & interest and PMI.
Total principal + interest paid over the rest of each loan's life.
Rate Scenario Comparison
See how a slightly better or worse new rate changes your break-even timeline, using your current loan details above.
| Scenario | New Rate | Monthly Savings | Simple Break-Even | Lifetime Interest Saved |
|---|---|---|---|---|
| Small Rate Drop | 6.75% | $189/mo | 2 Years and 11 Months | $0 |
| Your Scenario | 6.25% | $300/mo | 1 Year and 10 Months | $22,041 |
| Larger Rate Drop | 5.50% | $462/mo | 1 Year and 2 Months | $80,542 |
Frequently Asked Questions
Q: What does "break even" mean on a mortgage refinance?
Break-even is the point where the money you save each month from a lower payment equals the closing costs you paid to refinance. Before that point, refinancing has cost you more than it has saved you; after it, you are net ahead.
Q: How is refinance break-even calculated?
The simplest method divides total closing costs by your monthly payment savings. More precise methods also track interest and PMI savings over time, adjust for your tax bracket, or compare refinancing against simply prepaying your existing loan.
Q: What closing costs are included in a refinance?
Typical costs include the loan origination fee, discount points, appraisal fees, title insurance, recording fees, and lender fees. This calculator lets you enter an origination percentage, points paid, and a lump sum for all other closing costs.
Q: Is a shorter or longer break-even period better?
Shorter is generally better if you plan to stay in the home only a few more years, since it means you recover your closing costs sooner. If you plan to stay long-term, a slightly longer break-even can still make sense if the lifetime interest savings are large.
Q: Does refinancing always lower my monthly payment?
No. A lower interest rate usually lowers the payment, but extending your loan back out to a full 30-year term, rolling in points, or refinancing to a shorter term can raise the monthly payment even while saving interest over the life of the loan.
Q: How does PMI affect the break-even calculation?
If your new loan-to-value ratio is above 80%, you may still owe private mortgage insurance (PMI) after refinancing. Eliminating PMI — for example because your home has appreciated — can meaningfully shorten your break-even period.
Q: What is the "break-even vs. prepayment" method?
This is the most conservative comparison. It asks: instead of spending your closing costs on a refinance, what if you had put that same cash toward extra principal payments on your current loan? It only counts the refinance as worthwhile once its savings beat that alternative too.
Q: Should I refinance if I might sell my home soon?
If you plan to sell or move before your calculated break-even date, refinancing usually does not make financial sense — you would pay closing costs without ever recovering them through lower payments.