Refinance Break-Even Calculator
How many months of savings it takes to earn back your closing costs — with terms down to the month, costs paid in cash or rolled into the loan, and the lifetime interest comparison that a restarted term can otherwise hide.
Your loan vs the refinance offer
Example: $300,000 at 7.5% → 5.75%, $6,000 costs ≈ $329.65/mo saved, break-even 1 yr 7 mo.
A clear win: same term, lower rate
Refinance a $300,000 balance with 25 years left at 7.5% into a 25-year loan at 5.75% with $6,000 in closing costs, and the payment falls from $2,216.97 to $1,887.32 — $329.65 a month. The costs are recouped in about 1 yr 7 mo, and because the term did not stretch, lifetime interest drops too: $365,092 left on the old path versus $266,196 on the new loan — $98,896 less interest before counting the costs. Both figures come from the same tested engine as the calculator above.
The term-reset trap: a lower payment that costs more
Now the honest case. Take a $250,000 balance at 6.5% with just 15 years left and refinance into a fresh 30-year loan at 5.9% with $5,000 in costs. The payment plunges from $2,177.77 to $1,482.84 — $694.93 a month, with break-even in only 8 mo. It looks unbeatable. But the current path had $141,998 of interest left, while the new 30-year loan accrues $283,823 — $141,825 MORE lifetime interest, because the clock restarted and the debt lingers for 15 extra years. The lower payment is real; so is the higher total cost. This calculator always shows both so you can decide which matters for your situation.
How to use the numbers
Break-even answers one question: how long must you keep the loan for the refinance to beat doing nothing on a cash basis. If you might sell or refinance again before break-even, the deal loses money regardless of the rate. The lifetime-interest line answers the other question: what the loan costs if you keep it to the end. To isolate the rate effect, set the new term equal to your remaining term. To model the full payment picture with taxes and insurance, use the Mortgage Calculator; for a quick same-term comparison at whole-year terms, the Refinance Calculator is the shorter path.
Frequently asked questions
Why do I enter closing costs myself instead of picking a percentage?
Because costs are lender- and deal-specific: origination points, appraisal, title, and recording fees vary widely, and "no-cost" offers fold them into the rate instead. Enter the actual dollar figure from your Loan Estimate — that is the number the break-even is measured against.
What does rolling closing costs into the loan change?
You skip the upfront cash, but the costs become principal: the new loan is larger, the payment is slightly higher, and you pay interest on the costs for the whole term. This calculator finances them into the new balance when the toggle is on, so both the payment and the lifetime interest reflect it.
My payment drops a lot — why does the result say I pay more interest?
That is the term reset. If you have 15 years left and refinance into a fresh 30-year loan, the payment falls mostly because you stretched the debt over twice the time, not because the debt got cheaper. Interest accrues for 15 extra years, which can swamp the rate improvement. Compare at your remaining term to see the rate effect alone.
Are the rates in this calculator quotes?
No. Rate quotes are lender-specific and depend on credit, equity, and the day's market. This tool computes YOUR numbers from the rates and costs you enter — get written Loan Estimates from lenders and test each one here.
Not financial advice: a general educational estimate. Actual rates, costs, and eligibility are lender-specific — get written Loan Estimates before deciding. Values are processed locally in your browser and never transmitted. See the methodology page.