Refinance Break-Even Calculator

Refinancing your mortgage saves you on interest but costs 2-5% of the loan amount in closing costs. The break-even point tells you how long it takes for your monthly savings to cover those costs. If you plan to stay in the home longer than the break-even point, refinancing makes financial sense.

How to Use This Tool

Enter your current mortgage loan balance.
Enter your current interest rate.
Enter the new interest rate you are being offered.
Enter the remaining term on your current loan in years.
Enter the closing costs for the refinance.
Click Calculate to see your break-even point and monthly savings.

The Formula

Break-even months = Closing Costs / Monthly Payment Savings. Monthly savings = Current Payment - New Payment. Each payment is calculated using the amortization formula: PMT = P x [r(1+r)^n] / [(1+r)^n - 1].

Why It Matters

Your mortgage balance is $200,000 at 7% with 25 years remaining. A new rate of 5.5% with $4,000 in closing costs saves you $233/month. The break-even point is 17 months — if you plan to stay in the home longer than that, refinancing saves you over $34,000 over the remaining term.