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Mortgage Refinance Break-Even Calculator

Find out how many months it takes for a lower monthly payment to recoup a refinance's closing costs.

Current monthly payment
$1,932.90
New monthly payment
$1,520.06
Monthly savings
$412.85
Break-even point
1 yr 0.1 mo (12.1 months)

How it works

This compares two monthly payments on the same current loan balance, each computed with the standard fixed-rate amortization formula M = P·r(1+r)ⁿ / ((1+r)ⁿ − 1): what you're paying now on the remaining years of your current loan, versus what a new loan at the new rate and term would cost. The difference is your monthly savings.

Break-even point is simply closing costs ÷ monthly savings — how many months of that savings it takes to recoup what you'd pay upfront to refinance. After that point, every additional month is money you wouldn't have kept otherwise.

This assumes a straightforward rate-and-term refinance of your exact current balance — no cash-out and no rolling the closing costs into the new loan. If the new payment isn't actually lower than your current one, there's no break-even point to find, and the calculator flags that instead of returning a negative or nonsensical number.

FAQ

Does a lower interest rate always mean a lower monthly payment?

Not necessarily — a lower rate stretched over a much longer new term can sometimes produce a similar or even higher payment than a higher rate on fewer remaining years, since term length affects the payment as much as rate does. This calculator compares the actual resulting payments, not just the rates.

What if I'm also taking cash out or rolling the closing costs into the loan?

This calculator assumes the new loan refinances exactly your current balance, paid for out of pocket. Cash-out refinancing or financing the closing costs into the new balance changes the numbers — you'd need to adjust the current balance or closing costs figures to reflect the loan you'd actually be taking out.

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