United States · 2026 calculator

Mortgage Refinance Break-Even Calculator

Compare your current mortgage with a proposed refinance, including closing costs, break-even month and lifetime savings.

What this calculator explains

A lower monthly payment does not automatically mean a refinance saves money. The payment may fall because the interest rate is lower, the term is longer, or both. This calculator shows a simple break-even month alongside a fuller comparison of interest, fees, balance and payoff date.

Closing costs can be paid in cash, added to the loan or reflected in a higher rate. The selected treatment is displayed clearly, and cash-out proceeds are kept separate from genuine savings.

How the estimate is calculated

Project the remaining payment and interest path of the current mortgage.
Add financed closing costs and cash-out to the proposed new principal where selected.
Calculate the new payment and amortization schedule.
Find simple break-even by dividing upfront costs by monthly payment savings when savings are positive.
Calculate cumulative net savings for the user’s expected holding period.
Compare payoff dates and remaining balances at the end of the horizon.

Formula

Simple break-even months = upfront refinance costs ÷ monthly payment savings; full comparison also includes financed costs, term reset and remaining balance

Worked example

If refinancing reduces the monthly payment from $2,400 to $2,150, the monthly difference is $250. With $6,000 of upfront closing costs, the simple break-even is $6,000 ÷ $250 = 24 months. The user should still compare total interest and the new payoff date because a longer term can increase lifetime cost.

Current rules and configuration notes

Simple break-even months equal eligible upfront refinance costs divided by monthly payment savings.
The full comparison must also show financed costs, a reset loan term, cash-out, remaining balances and total interest.
A lower monthly payment can still produce a higher lifetime cost.

Update requirement: The calculation is evergreen; consumer explanations and fee assumptions should be reviewed periodically.

Included in the estimate

Current and proposed amortization schedules
Upfront or financed closing costs
Simple break-even month
Holding-period net savings
Cash-out and extra-payment scenarios
Payoff-date and remaining-balance comparison

Not included or not guaranteed

A lender rate quote or approval
Tax consequences of mortgage interest
Prepayment penalties unless entered
Property appraisal or title requirements
A recommendation that refinancing is suitable

Frequently asked questions

What is refinance break-even?

It is the point when cumulative monthly savings recover the closing costs paid to obtain the new loan.

Should financed closing costs count?

Yes. Financing costs increases the new principal and affects both payment and total interest even when no cash is paid at closing.

What if the new payment is lower because the term is longer?

The result flags a term extension and shows estimated lifetime interest and payoff date, not only monthly savings.

How long should I plan to stay in the home?

Use the period you reasonably expect to keep the mortgage. Selling, moving or refinancing again before break-even can eliminate projected savings.

Does cash-out refinancing save money?

Cash-out serves a separate borrowing goal. Compare the new debt and total interest rather than treating cash received as a saving.

Should I compare APR or rate?

Use the payment rate in the amortization model and include fees separately. APR can help compare offers but is not itself the monthly payment rate.

Official sources

Applicable period: 2026 · Last reviewed: September 3, 2026

Display the applicable period and a real Last reviewed date beside this source list.

Compare offers with the same horizon

Save multiple lender scenarios and compare net savings at 2, 5, 10 years and the final payoff date.

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