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Refinance Break-Even Calculator

Refinancing only saves money if you stay long enough to recoup the closing costs. Find your break-even point.

Current mortgage

Refinance offer

Break-even point

22 months

If you stay longer than this, refinancing wins

Monthly payment savings

$281

$1,996 → $1,715

Lifetime savings

$53,369

Total payments over both loan terms

Rule of thumb: Refinance when the rate drops by 0.5-0.75% AND you'll stay in the home longer than your break-even period.

Analysis & insights

Refinancing from 7.5% to 6% on your $280,000 balance lowers your monthly payment by $281. Break-even is 1y 9m — that's how long you need to stay in the home for the rate savings to offset the $6,000 closing costs. Under 3 years to break-even is a strong refi opportunity. Lock it in.

Strong refi opportunity

Under 2 years to break-even — refinance pays off quickly. Lock in the rate immediately.

Risk & benchmark gauge

Current band

Quick payoff

1y 9m to break-even

0255075100
Quick payoffReasonableLong horizonSkip refi

Industry benchmarks

  • Your break-even1y 9m
  • Typical streamlined refi BE18-24 months
  • Typical standard refi BE30-48 months
  • Typical cash-out BE60+ months
  • Monthly savings$281

Key insights

Rate drop: 1.50 percentage points

Strong drop — the historical refinance trigger threshold is ~0.5-0.75 points. You're comfortably past it.

Term reset is the hidden cost

Refinancing to a NEW 30-year loan after 5 years in the original 30-year resets the amortization clock — you'll pay 5 extra years of interest. Consider refinancing to a SHORTER term, or keep paying your old monthly amount after refinancing.

Watch for "no-cost" refi traps

Lenders advertising "no closing costs" typically bake those costs into a 0.25-0.5% higher rate. Often more expensive than paying closing costs upfront.

Scenario analysis

If you stay 2 years

$752

Savings net of closing costs over 24 months.

You

If you stay 5 years

$10,879

Most likely tenure for typical homeowner — usually where refi math wins.

If you stay 10 years

$27,758

Long-tenure homeowner case — refi typically a clear win at this horizon.

Full new term

$53,369

Over the full life of both loans.

Recommended actions(4)

Refinance — but consider a shorter term

High priority

Instead of a new 30-year, ask for 15 or 20 year. Better rate, less total interest, and you don't reset the amortization.

Impact: A 15-year typically gets a rate 0.25-0.5% lower than 30-year, and you cut ~60% off lifetime interest.

Shop at least 3 lenders

Medium priority

Rate quotes are free and don't hurt your credit if pulled within a 14-day window. A 0.125% rate difference is worth thousands.

Confirm property hasn't lost value

Medium priority

Lenders require appraisal. If your home value dropped, you may need to bring cash to closing or face PMI on a refinance you didn't expect.

Find the Best Mortgage Rate

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This tool is for educational purposes only and does not constitute financial, tax, or investment advice. Consult a qualified financial professional for advice specific to your situation.