Refinance Break-Even Calculator

Refinancing makes financial sense when the monthly savings from a lower rate exceed the closing costs before you plan to sell or move. The break-even point is closing costs divided by monthly savings. If you'll stay in the home longer than the break-even period typically 2–5 years for a 1% rate reduction refinancing saves you money. If you're likely to move before break-even, you'll pay more in fees than you recover in savings.

The break-even point is the number of months it takes for your accumulated monthly savings to equal the upfront closing costs. For example, if your new loan saves you $250/month and closing costs are $6,000, your break-even is 24 months. After month 24, every month in the home produces net savings. The calculator also shows the break-even date in calendar terms so you can compare it directly against your expected move date.

On most loans, a 1% rate reduction produces meaningful monthly savings. On a $300,000 balance, dropping from 7.5% to 6.5% reduces your monthly payment by roughly $190. With typical closing costs of $4,500–$6,000, the break-even is about 24–32 months. Whether that's worth it depends entirely on how long you plan to stay. If you've already lived in the home for 5+ years and have less than 20 years remaining, compare the total interest saved over the remaining term rather than just the monthly payment change.

Refinance closing costs typically run 2–3% of the loan balance. On a $300,000 balance, expect $6,000–$9,000 in fees. These include origination fees (0.5–1%), appraisal ($400–$700), title insurance, recording fees, and prepaid items like escrow setup and prepaid interest. Some lenders offer no-closing-cost refinances, but these fold the costs into a higher rate or larger balance you still pay them, just over time.

Refinancing from a 30-year to a 15-year term typically cuts your interest rate by 0.5–0.75% and dramatically reduces total interest paid. The trade-off is a higher monthly payment often 30–40% higher than the 30-year equivalent. The calculator models any combination of new rate and new term, so you can compare a 30-year refinance against a 15-year refinance side by side and see the difference in monthly payment, total interest, and break-even timing.