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Refinance Break-Even Calculator
See exactly how many months it takes for your monthly savings to pay back the closing costs of refinancing.
Short answer
The break-even point of a refinance is how long it takes for your monthly payment savings to recover the closing costs you paid. It's the closing costs divided by the monthly saving — so $6,000 in costs and a $300 lower payment breaks even in 20 months. If you'll keep the loan past that point, refinancing pays off. Enter your numbers below to find your break-even month.
Current payment
$2,038.83
Principal + interest
New payment
$1,703.37
Principal + interest
Monthly savings
$335.46
Lower each month
Break-even
1 yr 6 mo
To recover costs
Over the life of the loan you'd save $65,833 in total cost ($71,833 of it interest).
New loan amortization schedule
Amortization schedule
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $4,041 | $16,399 | $295,959 |
| 2 | $4,269 | $16,171 | $291,690 |
| 3 | $4,510 | $15,930 | $287,179 |
| 4 | $4,764 | $15,676 | $282,415 |
| 5 | $5,033 | $15,407 | $277,382 |
| 6 | $5,317 | $15,123 | $272,065 |
| 7 | $5,617 | $14,823 | $266,448 |
| 8 | $5,934 | $14,507 | $260,514 |
| 9 | $6,269 | $14,172 | $254,245 |
| 10 | $6,622 | $13,818 | $247,623 |
| 11 | $6,996 | $13,445 | $240,627 |
| 12 | $7,390 | $13,050 | $233,237 |
| 13 | $7,807 | $12,633 | $225,430 |
| 14 | $8,248 | $12,193 | $217,182 |
| 15 | $8,713 | $11,728 | $208,469 |
| 16 | $9,204 | $11,236 | $199,265 |
| 17 | $9,724 | $10,717 | $189,541 |
| 18 | $10,272 | $10,168 | $179,269 |
| 19 | $10,851 | $9,589 | $168,418 |
| 20 | $11,464 | $8,977 | $156,954 |
| 21 | $12,110 | $8,330 | $144,844 |
| 22 | $12,793 | $7,647 | $132,051 |
| 23 | $13,515 | $6,925 | $118,536 |
| 24 | $14,277 | $6,163 | $104,259 |
| 25 | $15,083 | $5,358 | $89,176 |
| 26 | $15,933 | $4,507 | $73,243 |
| 27 | $16,832 | $3,608 | $56,411 |
| 28 | $17,782 | $2,659 | $38,629 |
| 29 | $18,785 | $1,656 | $19,844 |
| 30 | $19,844 | $596 | $0 |
Why the break-even point decides the deal
Refinancing has upfront costs — appraisal, origination, title — that only pay back through a lower monthly payment. If you sell or refinance again before the break-even month, you lose money on the deal; if you stay past it, every month is pure savings. The calculator divides your closing costs by your monthly savings to give the exact month you come out ahead.
How we calculate this
Every number on this page comes from running the standard amortization math a lender uses — once for your current loan and once for the new one — then comparing them:
- Current payment. computed from your remaining balance, current rate, and years left: M = P·r ÷ (1 − (1 + r)⁻ⁿ), with r the annual rate ÷ 12. Because amortization is memoryless, this reproduces your actual scheduled payment without needing the original loan.
- New payment. the same formula on the new loan amount (your balance plus any cash-out and any financed closing costs) at the new rate and term.
- Monthly savings. current payment minus new payment. A longer new term can lower it even when the rate barely moves.
- Break-even. closing costs ÷ monthly savings, rounded up to whole months — how long until the lower payment repays what the refinance cost. There's no break-even when the payment doesn't drop.
- Lifetime cost. total principal + interest still owed on the current loan versus the new loan plus upfront costs, so a lower payment that stretches the term and costs more overall can't hide.
Assumptions
- A fixed interest rate on both loans — adjustable-rate loans (ARMs) reset and are not modeled here.
- Principal and interest only. Property tax, homeowners insurance, PMI, and HOA dues are escrowed on top and not included.
- Break-even uses monthly payment savings only; it does not model the tax treatment of mortgage interest.
- Educational estimates, not a loan offer or financial advice — your lender's figures govern.
Sources
Last reviewed: July 19, 2026
Frequently asked questions
Related tools
How do I know if refinancing is worth it?+
Compare your monthly savings against the closing costs. Divide the closing costs by the monthly payment saving to get your break-even point in months — if you'll keep the loan past that point, refinancing pays off. Also check the lifetime cost: a lower payment that stretches the term over more years can cost more overall. This calculator shows all three so you can decide.
What is the break-even point on a refinance?+
The break-even point is how many months it takes for your lower monthly payment to recover the closing costs you paid. It's closing costs ÷ monthly savings — for example, $6,000 in costs and a $300 lower payment breaks even in 20 months. Before that month you're behind on the deal; after it, every month is savings.
How much does it cost to refinance a mortgage?+
Refinance closing costs typically run about 2%–6% of the loan amount — appraisal, origination, title, and recording fees. On a $300,000 loan that's roughly $6,000–$18,000. You can pay them upfront or roll them into the new loan; rolling them in avoids the cash outlay but raises your balance, payment, and total interest. Toggle the option above to compare.
What is a cash-out refinance?+
A cash-out refinance replaces your mortgage with a larger loan and pays you the difference in cash, which you can use for renovations, debt, or other needs. Your new loan amount is your current balance plus the cash taken out, so the payment and total interest rise with the amount you take. Lenders usually cap cash-out at 80% of your home's value.
Should I refinance my car loan?+
Refinancing an auto loan makes sense when your credit has improved, market rates have fallen, or you were given a high dealer rate at purchase. Car refinances rarely have fees, so almost any rate drop lowers your payment immediately with no break-even to wait for. Just avoid stretching the term so far that you pay more total interest — the lifetime figure above shows that.
Does refinancing to a longer term save money?+
It lowers your monthly payment but usually raises the total interest, because you're spreading the balance over more years. Refinancing a loan with 20 years left back out to 30 years can drop the payment noticeably while costing tens of thousands more over the life of the loan. Watch the lifetime savings figure, not just the monthly one.
Estimates for planning only, not financial advice or a loan offer. Principal and interest at a fixed rate; excludes property tax, insurance, PMI, and HOA dues. Your lender's figures govern.