⚖️ Refinance Break-Even Calculator
Calculate refinancing break-even point
Total closing costs for refinancing (typically 2-5% of loan amount)
How to Use This Calculator
Enter Current Loan Details
Input your current loan balance, interest rate, and remaining loan term. This represents your current mortgage or loan situation.
Enter New Loan Details
Enter the new interest rate and loan term for the refinance loan you're considering. This will be compared to your current loan.
Enter Closing Costs
Enter the total closing costs for refinancing (typically 2-5% of loan amount). This includes origination fees, appraisal fees, title insurance, and other fees.
Review Break-Even Analysis
See the break-even point (how long it takes to recoup closing costs), monthly savings, and whether refinancing makes financial sense. Use this to make informed refinancing decisions.
Formula
Monthly Payment = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ - 1]
Monthly Savings = Current Payment - New Payment
Break-Even Months = Closing Costs ÷ Monthly Savings
Example Calculation:
If current balance $200,000, current rate 6%, new rate 4%, term 30 years, closing costs $3,000:
• Current payment: ~$1,199/month
• New payment: ~$955/month
• Monthly savings: $244/month
• Break-even: $3,000 ÷ $244 = ~12.3 months
• If you stay longer than 12.3 months, refinancing saves money
About Refinance Break-Even Calculator
A refinance break-even calculator helps you determine if refinancing your loan makes financial sense by calculating the break-even point - how long it takes to recoup your closing costs through monthly savings. The break-even point is crucial because refinancing only makes sense if you plan to stay in the home or keep the loan longer than the break-even period. This calculator shows you the break-even point, monthly savings, and net savings to help you make informed refinancing decisions.
When to Use This Calculator
- Refinance Evaluation: Evaluate if refinancing saves money
- Break-Even Analysis: Determine break-even point with closing costs
- Decision Making: Decide if refinancing makes financial sense
- Timing Analysis: Understand how long to keep the loan
Understanding Break-Even Point
- Definition: Time to recoup closing costs through monthly savings
- Calculation: Closing Costs ÷ Monthly Savings
- Rule of Thumb: Refinance if break-even is less than 2-3 years
- Stay Duration: Must stay longer than break-even to benefit
Why Use Our Calculator?
- ✅ Break-Even Calculation: See exactly when refinancing pays off
- ✅ Savings Analysis: Understand monthly and total savings
- ✅ Decision Support: Make informed refinancing decisions
- ✅ Cost-Benefit: See if refinancing is worth it
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is a break-even point?
The break-even point is how long it takes to recoup your closing costs through monthly savings from refinancing. For example, if closing costs are $3,000 and you save $250/month, break-even is 12 months. If you'll stay in the home/keep the loan longer than the break-even point, refinancing makes financial sense.
What is a good break-even point?
A good break-even point is typically less than 2-3 years. If break-even is longer than 3 years, refinancing may not be worth it unless you're certain you'll stay in the home/keep the loan for a long time. Shorter break-even points (under 12 months) are ideal and indicate strong refinancing value.
Should I refinance if I'm planning to move soon?
If you're planning to move before the break-even point, refinancing typically doesn't make financial sense because you won't recoup the closing costs. However, if you're moving after the break-even point, refinancing can still save money. Use this calculator to see if the savings period exceeds the break-even point.
Can I avoid closing costs?
Some lenders offer "no-cost" refinancing by either: (1) Rolling closing costs into the loan (increases loan amount), or (2) Increasing the interest rate slightly (lender pays costs but you pay higher rate). "No-cost" refinancing eliminates the break-even calculation but may result in higher total costs over time. Compare total costs carefully.