Refinance Break-Even Calculator
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Refinancing is worth it only if you keep the loan long enough to earn back the closing costs. This works out that break-even point, and it flags the trap the monthly payment hides: a lower rate spread over a longer term reduces what you pay each month while increasing what you pay in total. Both numbers are shown, because only one of them is the whole story.
How to use Refinance Calculator
- 1
Enter your current balance, rate, and how many months are left on the loan.
- 2
Enter the new rate and term you have been offered, plus the closing costs.
- 3
Read the break-even point and, importantly, the change in total interest over the full term.
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Frequently asked questions
What is the break-even point?+
The number of months of lower payments needed to repay the closing costs. If refinancing costs $6,000 and saves $250 a month, you break even after 24 months — and refinancing only makes sense if you expect to keep the house and the loan past that point.
Why does a lower payment sometimes cost more?+
Because refinancing usually restarts the clock. Replacing 22 years remaining with a fresh 30-year term at a lower rate can cut the monthly payment and still add tens of thousands in total interest, since you are paying for eight more years. This calculator reports the lifetime difference alongside the monthly one for exactly that reason.
What counts as closing costs?+
Origination and application fees, appraisal, title insurance and search, recording fees, and any discount points. On a typical US mortgage they run about 2–5% of the loan amount, and lenders must itemise them on the Loan Estimate.
Does this account for a cash-out refinance?+
Not directly. Enter the balance you intend to finance, including any cash taken out, and the result reflects that larger loan — but the comparison against your current payment assumes the same balance, so read the monthly difference with that in mind.