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Finance Calc Kit
Mortgages

Refinance Break Even Calculator

Calculate break-even point in months, net savings, and payback schedule when refinancing a loan.

Refinance details

$
$
$
months

Break-even point

12 months

Monthly savings

$300.00

Current payment minus new payment

Total net lifetime savings

$86,400.00

After break-even over 300 remaining months

Payback summary

Closing costs to recover$3,500.00
Monthly payment reduction$300.00
Months to break even12
Net savings after break-even$86,400.00
Report tool

How the refinance break-even calculator works

Refinancing can lower your monthly payment, but closing costs take time to recover. This calculator shows how many months you need before the payment savings exceed upfront fees, and how much you could save over the remaining loan term. All math runs in your browser.

Compare full refinance scenarios with the refinance calculator, estimate new payments with the mortgage calculator, or see how extra payments shorten your timeline with the mortgage payoff calculator.

Refinance break-even formulas

Monthly savings is the difference between your current and new payment, floored at zero:

Monthly Savings=max⁡(0, Current Payment−New Payment)\text{Monthly Savings} = \max\left(0,\ \text{Current Payment} - \text{New Payment}\right)

Break-even months divide closing costs by monthly savings, rounded up:

Break-Even Months=⌈Closing CostsMonthly Savings⌉\text{Break-Even Months} = \left\lceil \frac{\text{Closing Costs}}{\text{Monthly Savings}} \right\rceil

Net lifetime savings counts only the months after break-even over your remaining term:

Net Savings=max⁡(0, Remaining Months−Break-Even Months)×Monthly Savings\text{Net Savings} = \max\left(0,\ \text{Remaining Months} - \text{Break-Even Months}\right) \times \text{Monthly Savings}

Worked example: $3,500 closing costs, $300 monthly savings

Suppose closing costs are $3,500, your current payment is $1,800, the new payment is $1,500, and 300 months remain on the loan:

  1. Monthly savings: $1,800 - $1,500 = $300
  2. Break-even months: ceil($3,500 / $300) = 12 months
  3. Savings months after break-even: 300 - 12 = 288
  4. Net lifetime savings: 288 x $300 = $86,400

If the new payment is not lower, monthly savings is zero and the refinance never breaks even on payment reduction alone. Run the full picture in the refinance calculator before you commit.

Frequently asked questions

What is a refinance break-even point?
It is the number of months until your cumulative monthly payment savings equal the upfront closing costs of the refinance. After that point, each month of savings is net gain.
What closing costs should I include?
Include lender fees, appraisal, title insurance, recording fees, and any points you pay at closing. Exclude prepaid property taxes or escrow deposits that you would pay regardless of refinancing.
When is refinancing worth it?
Refinancing tends to make sense when you plan to keep the loan past the break-even point and the new rate or term meaningfully lowers your payment or total interest. A short break-even with many years left is a stronger signal.
Does this include tax effects or PMI changes?
No. This tool compares payment reduction against closing costs only. Mortgage interest deductibility and PMI removal can change the real economics but are not modeled here.
Are the results stored?
No. Changing the fields only updates the page URL so you can copy and share your inputs.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.