How the refinance break-even calculator works
Enter your current balance, current rate, the new rate you're offered, and the total closing costs. The calculator compares your old monthly payment with the new one, then divides the closing costs by your monthly savings.
The result is your break-even point: the number of months until the refinance has paid for itself. Stay past that date and every month after is pure savings.
Worked example: break-even in 15.4 months
Refinance a $280,000 balance from 7.5% down to 6%, paying $6,000 in closing costs. Your monthly payment drops by $390.43 — and $6,000 ÷ $390.43 puts your break-even point at 15.4 months.
If you sell or refinance again before month 16, you lose money on the deal. Stay longer, and the savings keep stacking up month after month.
What to watch out for
Break-even assumes you'll keep the loan — and the home. Moving, selling, or refinancing again resets the clock. Also check whether the new loan restarts your term; a lower payment over a longer term can cost more in total interest.
Compare the APR and total closing costs across lenders — some roll fees into the balance, which quietly raises what you owe. Results are estimates, not financial advice.
Frequently asked questions
When is refinancing worth it?
Usually when you can drop your rate by at least 0.75 to 1 percentage point, the closing costs break even within a few years, and you plan to stay put. If you'll move soon, the savings rarely have time to outweigh the fees.
What are typical refinance closing costs?
Expect 2% to 6% of the loan amount — lender fees, appraisal, title, and prepaid items. On a $280,000 balance that's roughly $5,600 to $16,800, which is why the break-even calculation matters so much.
Does refinancing hurt my credit score?
There's a small, temporary dip from the hard inquiry and the new account. But rate-shopping within a focused window counts as one inquiry, and the score typically rebounds within a few months of on-time payments.
Can I refinance with no closing costs?
So-called no-closing-cost refinances just move the fees — into a higher rate or a larger loan balance. You'll break even immediately, but you'll pay more over time. Run both versions through the calculator to see which actually costs less.