Refinance Break-Even Calculator
Enter your current loan, the new rate, and closing costs. The calculator gives the break-even month and a plain verdict on whether refinancing is worth it for how long you plan to stay.
| Monthly savings | — |
| Break-even point | — |
| Net savings over your stay | — |
The break-even formula
Break-even months = Closing costs ÷ Monthly savings
Refinancing $280,000 from 7.25% to 6.25% (25-year term) saves about $180/month. With $6,000 of closing costs, break-even lands around month 34 — worth it if you stay 7 years (net ≈ $9,100), not if you might move in 2.
Traps this simple math hides
- Term reset: refinancing 25 remaining years back to a fresh 30-year loan lowers the payment partly by adding 5 years of interest. Compare the same remaining term, as this calculator does.
- Rolled-in costs: financing closing costs into the new loan means paying interest on them for decades — the break-even math still applies, just less visibly.
- No-closing-cost refinances: the costs hide in a higher rate. Fine if you may move soon; expensive if you stay long.
Rules of thumb worth keeping
A refinance usually deserves a look when the new rate is at least 0.75–1 point lower and you plan to stay past break-even. Small rate drops rarely survive the closing costs.
Frequently asked questions
When is refinancing worth it?
When you stay past the break-even point: closing costs divided by monthly savings. A 1-point rate drop on $280,000 with $6,000 costs breaks even around 3 years — worth it for a 7-year stay.
What does refinancing cost?
Typically 2–5% of the loan: appraisal, title, origination, recording fees. On $280,000 expect $5,600–14,000, negotiable in part.
Does refinancing restart my loan?
It replaces your loan with a new one — and if you take a fresh 30-year term with 24 years left, you add 6 years of payments. Choosing a term equal to your remaining years avoids the reset.
Does refinancing hurt credit?
A small, short-lived dip from the hard inquiry and the new account. The effect fades within months of on-time payments.
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Last updated: 2026-07-08