Refinance Break-Even Calculator

How long until a refinance pays for itself?

A lower payment isn’t free — closing costs come first. This shows how many months it takes to recover them, and whether the new loan actually saves you money over its life. Both numbers matter, and they don’t always agree.

Your loan

Start with what you have now, then the terms you’ve been quoted.

Current balance

$50k$3M

Current rate

2%12%

Your first payment was

On your closing paperwork this is the “first payment date” — usually the month after you closed. It pins down exactly how many payments you have left.

Original term

New rate quoted

2%12%

New loan term

“Match” keeps your current payoff date instead of restarting the clock — usually a smaller monthly saving but far less interest overall.

Closing costs

$0$40k

Lender fees, title, escrow, appraisal, and recording. Ask for a Loan Estimate — it lists them all.

Lower monthly payment

new payment runs over 30 years

Break-even on closing costs—

after 0 payments you’re ahead

Payment today (principal & interest)$0

Payment after refinancing$0

Interest left on current loan$0

Interest on new loan + costs$0

Lifetime interest saved$0

That’s a fast break-even. Under two years is generally considered strong — if you expect to keep the home past that point, the costs are recovered quickly.

Long break-even. It takes over four years to recover the costs. Worth it only if you’re confident you’ll stay put well beyond that, or if you can reduce the costs.

No monthly savings at these numbers. The new payment is the same or higher, so there’s nothing to recover the closing costs. A refinance may still make sense for other reasons, but not on payment alone.

Lower payment, more total interest. Stretching the balance back out over a longer term reduces the monthly figure but costs more across the life of the loan. Try the “Match” term to compare.

Get real refinance numbers Or start your application →

No credit pull to start · takes about 10 minutes

Break-even isn’t the only test How long you plan to keep the home matters as much as the math. If you might sell or move before the break-even point, the closing costs never get recovered. And rolling costs into the loan instead of paying them up front changes both the balance and the interest — ask for that comparison alongside a Loan Estimate.

How this is calculated. Both payments are principal and interest only, fully amortizing. Your current payment is derived from the balance and rate you enter, amortized over the exact number of payments remaining — calculated from your first payment date and original term rather than rounded to whole years. Break-even is closing costs divided by the monthly payment difference. Lifetime interest compares the interest remaining on your current loan against the interest on the new loan plus its closing costs, so the comparison reflects what the refinance actually costs you.

Not included: property taxes, insurance, HOA dues, and mortgage insurance, none of which change because of a refinance; points and rate buydowns; prepayment penalties; cash taken out at closing; and the effect of rolling costs into the loan balance. Interest deductibility is not modeled — see the tax savings calculator on this site. Rates shown are figures you enter, not quotes, and your actual rate depends on credit, loan-to-value, occupancy, loan amount, and program. This is an educational estimate, not a pre-approval, a commitment to lend, or financial advice. Equal Housing Opportunity.