Refinance Break-Even Calculator
See how many months a lower mortgage payment takes to repay the closing costs of a refinance, and compare total interest.
Refinance break-even: months = closing costs ÷ monthly payment saving. $6,000 of costs and a $197.26 monthly saving break even in about 31 months.
Build your scenario
Use your actual figures where available. The output is an educational estimate based on the assumptions below.
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How the refinance break-even works
The calculator works out the principal-and-interest payment on your current loan and on the new loan, then divides your closing costs by the monthly difference. If you expect to keep the home past the break-even month, the refinance pays back its costs. Taxes, insurance and PMI are not included.
Break-even months = closing costs ÷ (current payment − new payment)
Worked example
A $300,000 balance at 7% with 360 months left costs $1,995.91 a month. Refinancing to 6% over 360 months costs $1,798.65, a saving of $197.26. Closing costs of $6,000 ÷ $197.26 = 30.4, so you break even in month 31.
A longer new term can lower the payment while raising total interest, so check the lifetime difference row too.
Break-even table: costs vs monthly saving
Months to break even = closing costs ÷ monthly saving.
| Closing costs | Save $100/month | Save $200/month | Save $300/month |
|---|---|---|---|
| $3,000 | 30 months | 15 months | 10 months |
| $6,000 | 60 months | 30 months | 20 months |
| $9,000 | 90 months | 45 months | 30 months |
What if I roll the costs into the loan?
On $300,000 over 30 years, dropping from 7% to 6% cuts the payment from $1,995.91 to $1,798.65, a $197.26 monthly saving. With $6,000 of costs paid in cash, break-even is about 31 months. If you add the $6,000 to the new loan instead, the payment becomes $1,834.62, so you save $161.28 a month from day one with no cash outlay. You are still paying interest on the costs, so compare total interest too. Read the refinance break-even guide for the term-reset trap.
Sources
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Frequently asked questions
How do you calculate refinance break-even?
Divide total closing costs by the monthly payment saving. $6,000 ÷ $197.26 ≈ 30.4, so about 31 months.
Worked example: is refinancing from 7% to 6% worth it?
On a $300,000 balance over 30 years the payment falls from $1,995.91 to $1,798.65. With $6,000 of costs you break even after about 31 months, so it suits someone staying longer than that.
Does a longer term change the answer?
Yes. Restarting a 30-year term can cut the payment but add interest over the life of the loan. Compare the lifetime difference, not just the monthly saving.
Are taxes and insurance included?
No. The calculator compares principal and interest only.
What is a good refinance break-even period?
One that ends well before you expect to sell or refinance again. Many people use 2 to 3 years as a comfortable rule of thumb, but the real test is how long you will keep the loan.
Educational information only; not financial, tax, legal, or investment advice.