Mortgage Refinance Breakeven Calculator
Work out whether refinancing your mortgage is worth it. Enter your current balance, rate and months remaining, then the new rate, term and closing costs. You will see the new payment, your monthly saving, the lifetime saving and the breakeven point, the number of months before the saving repays the cost of refinancing.
How to find your refinance breakeven point
- Enter your current loan balance, its interest rate and the months you have left to pay.
- Enter the new interest rate, the new loan term in months and the total closing costs.
- Read the monthly saving and the breakeven month to see when the refinance starts paying off.
Examples
Dropping from 6.5% to 5.5% on a 300k balance
Balance 300,000, current rate 6.5% with 360 months left, new rate 5.5% over 360 months, closing costs 4,000.
Payment falls from about 1,896 to 1,703, a saving near 193 a month, so the 4,000 cost is recouped in about 21 months.
A higher rate that never breaks even
Balance 250,000, current rate 4% with 300 months left, new rate 6% over 360 months, closing costs 5,000.
The new payment is higher, so there is no monthly saving and the refinance never breaks even.
Frequently asked questions
What is the refinance breakeven point?
It is the number of months it takes for your monthly saving to add up to what you paid in closing costs. We divide the closing costs by the monthly saving. If you keep the loan past that month the refinance has paid for itself; sell or refinance again before it and you lose money on the deal.
Why does the calculator say my refinance never breaks even?
If the new monthly payment is the same as or higher than your current one, there is no monthly saving to recoup the closing costs, so there is no breakeven point. That usually happens when the new rate is higher, or when a slightly lower rate is offset by resetting to a longer term.
Why can my lifetime saving be negative when my monthly payment drops?
A lower monthly payment often comes from stretching the balance back out over a longer term. More months of payments can mean more total interest, so even after a smaller monthly bill you can pay more overall once closing costs are added. The lifetime saving figure captures that, while the monthly saving and breakeven focus on near-term cash flow.
Does this include taxes, insurance or PMI?
No. The calculator compares principal and interest only. Property taxes, homeowners insurance, PMI and HOA dues are not part of the payment shown, so confirm your full housing cost with your lender before deciding.
How is each monthly payment calculated?
Both loans use the standard amortization formula. The annual rate is divided by 12 for a monthly rate, and the payment is set so equal monthly amounts repay the balance plus interest over the term. The current loan is amortized over its remaining months and the new loan over its full term.
Is this calculator free and private?
Yes. It is free to use and runs entirely in your browser, so the loan figures you enter are never uploaded or stored anywhere.
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