Mortgage Refinance Break-Even Calculator
Compare your current and new mortgage payments to find the monthly savings, the months to recoup closing costs, and lifetime savings.
How to use this tool
- Enter your remaining mortgage balance.
- Enter your current rate and the new rate you've been quoted.
- Enter the new loan term and estimated closing costs.
- Read the monthly savings and break-even period in months.
- Compare your break-even to how long you plan to keep the home.
Refinancing only makes sense if you stay long enough to recoup the closing costs. Enter your balance and both rates to see your monthly savings and exactly when you break even.
Formula
Both payments use the standard amortized-payment formula M = P × r ÷ [1 − (1 + r)−n] on the same balance and term, at the old and new rates. Then:
Monthly savings = Current payment − New payment
Break-even months = ⌈ Closing costs ÷ Monthly savings ⌉
Net lifetime savings = Monthly savings × n − Closing costs
How it works
Refinancing replaces your mortgage with a new loan, usually to capture a lower rate. It only pays off if you keep the home long enough for the monthly savings to recoup the upfront closing costs — the break-even point.
This calculator computes both the old and new payments on the same balance and term, takes the difference as your monthly savings, and divides the closing costs by that savings to get the break-even period in months. If you plan to stay past break-even, refinancing is generally worthwhile; if you'll sell sooner, it costs you money.
For an apples-to-apples comparison the new term here matches the input term. Resetting a 22-year-old loan back to 30 years lowers the payment but can raise total lifetime interest, so weigh the monthly savings against the longer payoff. A no-closing-cost refinance trades a higher rate for zero upfront cost.
Worked example
$300,000 balance, 7% to 5.5%, 30 years, $6,000 costs
- Current payment at 7% over 30 yr on $300,000 = $1,995.91.
- New payment at 5.5% over 30 yr on $300,000 = $1,703.37.
- Monthly savings = $1,995.91 − $1,703.37 = $292.54.
- Break-even = ⌈ $6,000 ÷ $292.54 ⌉ = ⌈ 20.5 ⌉ = 21 months.
- Net lifetime savings = $292.54 × 360 − $6,000 = $99,314.57.
Monthly savings $292.54 | Break-even 21 months | Current $1,995.91 | New $1,703.37 | Lifetime savings $99,314.57
Monthly P&I per $100,000 borrowed, by rate and term
| Rate | 15-year payment | 30-year payment |
|---|---|---|
| 4% | $739.69 | $477.42 |
| 5% | $790.79 | $536.82 |
| 6% | $843.86 | $599.55 |
| 7% | $898.83 | $665.30 |
| 8% | $955.65 | $733.76 |
Key terms
- Refinance
- Replacing an existing mortgage with a new one, typically to lower the rate, change the term, or tap equity.
- Closing costs
- Upfront fees to originate the new loan — appraisal, title, origination, and recording — usually 2–5% of the balance.
- Break-even point
- The number of months at which cumulative monthly savings equal the closing costs you paid to refinance.
- No-closing-cost refinance
- A refinance where the lender covers upfront fees in exchange for a slightly higher interest rate, eliminating the break-even calculation's cost side.
Frequently asked questions
- When is refinancing worth it?
- Refinancing is generally worthwhile if you'll stay in the home past the break-even point — when accumulated monthly savings exceed the closing costs. A rate drop of about 0.75–1% often makes the math work.
- What are typical closing costs to refinance?
- Closing costs usually run 2–5% of the loan balance, covering appraisal, title, origination, and recording fees. On a $300,000 loan that's roughly $6,000–$15,000.
- Does refinancing reset my loan term?
- It can. Refinancing into a new 30-year loan lowers your payment but extends the payoff and may increase total interest. Choose a shorter term, or apply the savings as extra principal, to avoid that.