Refinance Calculator: Break-Even Point & True Savings
A lower rate does not automatically mean a good deal — closing costs have to be earned back first. Enter your current loan and the new offer to find your break-even month, your true total savings, and what happens if rates fall further. Everything runs in your browser; nothing is uploaded.
Cumulative monthly savings vs. upfront closing costs. The intersection is your break-even month — after that point, the savings are truly yours.
Assumptions: closing costs are paid out of pocket (not rolled into the loan); both rates are fixed; taxes and insurance are excluded from this comparison. Refinancing into a longer term restarts the amortization clock — compare total interest, not just the monthly payment.
Educational use only: this calculator is for educational purposes only and does not constitute financial advice. Consult a qualified financial advisor before making decisions.
How to use this calculator
- Your current loan — enter the payoff balance (not the original amount), your current rate, and how many years are left. The "years remaining" matters: refinancing a loan with 10 years left into a new 30-year loan restarts the clock.
- The new offer — enter the quoted rate and term. Use the scenario pills to see what happens if rates fall another 0.25% or 0.50% before you lock.
- Closing costs — include everything: origination, appraisal, title, recording fees. Freddie Mac reports refinancing typically costs about 3%–6% of the loan principal.
- Read the break-even callout — it tells you the month your savings overtake your costs. If you might move or refinance again before then, this deal loses money.
- Check total interest — a lower payment with a longer term can still cost more overall. The two "total interest" boxes show the real trade-off.
The formula behind it
Both payments use the standard amortization formula M = P × r(1+r)n / ((1+r)n − 1). The break-even point is then simple division:
Break-even months = total closing costs ÷ monthly payment savings (rounded up)
Net savings over the new term = (old payment × old remaining payments) − (new payment × new payments + closing costs). A positive number means the refinance saves money over the full term — but only if you actually keep the loan that long.
Learn the full decision framework: Refinance Break-Even Calculator: How to Know When Refinancing Pays Off.
Frequently asked questions
What is the refinance break-even point?
The break-even point is the month when your accumulated monthly savings finally cover the upfront closing costs of the refinance. The simple formula is: break-even months = total closing costs / monthly payment savings, rounded up. For example, $6,000 in closing costs with $184 of monthly savings breaks even in month 33. If you sell or refinance again before that month, the refinance cost you money.
How much are refinance closing costs in 2026?
Freddie Mac reports that refinancing typically costs about 3% to 6% of the loan principal, though many lenders quote a 2% to 5% range. On a $300,000 loan that is roughly $6,000 to $18,000. The total includes the origination fee, appraisal, title services, recording fees, and any discount points you buy. Shopping at least three lenders is the most reliable way to lower them.
When does refinancing NOT make sense?
Refinancing usually does not make sense if you plan to move or refinance again before the break-even month, if the rate improvement is tiny (a quarter point on a small balance may never pay back the fees), if your credit score would land you a worse rate than advertised, or if extending the term means you pay more total interest despite a lower payment. Run the break-even math first — the monthly payment alone does not tell the whole story.
Does refinancing reset the clock on my mortgage?
Yes, if you refinance into a new 30-year loan while you had, say, 22 years left, you restart the amortization schedule at 30 years. The lower payment can be real savings, but you will make 8 extra years of payments, which can increase total interest paid over the life of the loan. This calculator shows total interest for both loans so you can see the trade-off, and refinancing into a shorter term avoids the reset.
What is the catch with no-closing-cost refinances?
There is no free lunch: no-closing-cost refinances roll the costs into the loan balance or charge a higher interest rate via lender credits. A higher balance or rate means a slightly higher payment and more total interest. They can still make sense if you will move before the break-even point of a standard refinance, because you keep more cash today — but compare the total cost, not just the out-of-pocket amount.