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Refinance Break-even Calculator

Monthly savings + month closing costs are recouped.

PrivateFreeSourcedReviewed

Break-even point

Saves monthly

2.6 years

31 months · 7.500% → 6.360% on $350,000 · $10,500 closing costs
Monthly savings
$342.46
New payment
$2,180.11

was $2,522.57

Lifetime interest
$21,972 less

incl. closing costs

You save $342.46 a month, so the $10,500 of closing costs pay for themselves after 31 months. Stay longer than that and the refinance comes out ahead — but resetting 27 remaining years to a fresh 30-year loan means less total interest.

Try a what-if

You pay $21,972 less

Watch the term reset: If your current loan has 27 years left and you refinance into a fresh 30-year, you may lower the monthly payment but pay more total interest. The "lifetime interest" figure shows net change including closing costs.

Your numbers

$350,000

7.500% APR

6.360% APR

Default 6.36%Freddie Mac PMMS — 30-Year Fixed Rate Mortgage Averageas of May 2026

3.00% of loan (≈ $10,500)

Loan terms27 yrs left → new 30-year

27 years left

30-year fixed

Next steps

The Refinance Break-even Calculator compares your current mortgage to a refinance scenario and shows the exact month cumulative monthly savings recoup your closing costs. Closing costs typically run 2–5% of the loan amount per Freddie Mac — the calculator defaults to 3% as a midpoint. If you'll sell before break-even, refinancing doesn't pay; if you'll stay longer, it usually does.

How this calculator works

  1. Enter your CURRENT outstanding loan balance (not the original amount).
  2. Enter your current interest rate and the years remaining on the loan.
  3. Enter the NEW rate quote from your lender and the new term.
  4. Set closing costs as a % of loan (3% default — verify against your lender's Loan Estimate document).
  5. Read break-even months and lifetime interest change. The lifetime number SUBTRACTS closing costs from interest savings — a positive number means the refi pays out net.

monthly_savings = M_current − M_new break_even_months = closing_costs / monthly_savings

Two simple ratios. Monthly savings is the difference between your current and new mortgage payments. Break-even is closing costs divided by those monthly savings. If monthly savings ≤ 0, refinancing doesn't pay at these inputs, full stop.

M_current
Current monthly principal + interest payment
M_new
New monthly P+I after refinancing
closing_costs
All-in refinance closing costs (typically 2–5% of loan)

Frequently asked questions

What's a typical refinance break-even?

Most homeowners need 2-5 years to recoup typical closing costs (2-5% of loan amount). If you plan to move sooner, refinancing usually doesn't pay off unless rates have dropped substantially.

How much rate drop justifies refinancing?

A historical rule of thumb was 1 full percentage point, but with lower-cost online lenders it can make sense at 0.5-0.75%. Run the actual numbers — break-even depends as much on closing costs and how long you'll stay as on the rate gap.

Does extending the term cost me more?

Yes, usually. Refinancing a 20-year-remaining loan into a fresh 30-year resets the amortization clock — you might lower the monthly payment but pay more total interest. The calculator shows total interest comparison.

Sources used in this calculator

Reviewed by the Money Scale editorial team. How we source our data

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