How do I calculate the refinance break-even point?

Divide total refinance costs by the monthly payment savings. The result is the approximate number of months needed to recover the upfront cost.

Is a lower mortgage payment always a good refinance?

No. A lower payment can come from restarting a longer term, which may increase total interest even when the rate falls.

What costs should I include?

Include lender fees, appraisal and title charges, recording fees, and discount points. Exclude prepaid taxes or insurance when they are not a true incremental cost.

🏠 Mortgage Refinance Calculator

Compare your remaining mortgage with a proposed refinance. See the payment change, cash break-even point, and whether restarting the loan term could erase the benefit of a lower rate.

Current mortgage balance

Current interest rate (%)

Years remaining

New interest rate (%)

New loan term (years)

Closing costs ($)

Discount points paid (% of balance)

Return if monthly savings are invested (%)

estimated monthly principal-and-interest savings

Current Payment

New Payment

N/A

Cash Break-Even

Total Upfront Cost

Remaining Cost Difference

Savings Value Through Shared Term

How to read the result

Break-even

Cash break-even is upfront refinance cost divided by monthly savings. Plan to keep the loan beyond this point before treating the lower payment as a win.

Term reset

A new 30-year loan can lower the payment because repayment is stretched out, not only because the rate is lower. Compare remaining total cost.

Opportunity

The investment estimate shows what disciplined investing of the monthly difference might grow to during the period both loan schedules overlap. It is hypothetical and market returns are not guaranteed.

This estimate assumes a fixed-rate, fully amortizing mortgage and that closing costs and points are paid in cash. It excludes taxes, insurance, mortgage insurance, escrow changes, tax effects, and prepayment penalties.

Frequently Asked Questions

How do I calculate refinance break-even?

Divide all incremental refinance costs by monthly payment savings. For example, $6,000 of costs divided by $150 of monthly savings is a 40-month cash break-even.

Should prepaid taxes and insurance count as closing costs?

Usually compare incremental costs, not money that merely replenishes an escrow account. Ask the lender to separate lender, title, appraisal, recording, points, prepaids, and escrow deposits.

Can a refinance save monthly cash but cost more overall?

Yes. Extending a loan with 20 years left into a new 30-year term can add years of interest. The remaining-cost comparison is designed to expose that tradeoff.

Consumer resource: CFPB guidance on deciding whether to refinance.

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