Refinance break-even calculator
A new rate is only half the story. Closing costs, how long you will stay, and the length of the new loan decide whether a refinance really saves money. Put in your numbers and see.
Your numbers
These are example numbers. Replace them with yours from your latest mortgage statement and a lender's official offer. Nothing you type leaves this page.
Your current loan
The principal balance on your statement.
On your current loan
The new loan
Not a quote. For scale only: Freddie Mac Primary Mortgage Market Survey reported national averages of 7.40% (30-year fixed) and 6.73% (15-year fixed) on October 8, 2026, for buyers with good credit and 20% down. A refinance offer will differ.
Everything you would pay to close the new loan: lender, appraisal, title and other fees, plus any points. Your lender's official offer lists them.
Years before you sell or refinance again. Be honest: this decides the answer.
What changes
Your payment drops by about $242 a month. The $6,000 in closing costs would be earned back in about 2 years 1 month, which is before the 7 years you plan to stay.
- Closing costs earned back in
- 2 years 1 month
- costs divided by the monthly drop
- After 7 years, you are
- $14,108 ahead
- interest saved minus costs, vs. keeping your loan
You would restart the clock. The new loan runs 30 years, but you have 28 left on the current one. Part of any lower payment comes from spreading the loan over more time. If you kept both loans to the end, interest from today would be about $418,571 on your current loan versus $382,633 on the new one. At these numbers the new loan still costs less in total interest, but you would be paying for longer.
If your plans change: ahead or behind, by year
| After year | Refinancing leaves you |
|---|---|
| 1 | $3,012 behind |
| 2 | $54 behind |
| 3 | $2,870 ahead |
| 4 | $5,754 ahead |
| 5 | $8,593 ahead |
| 6 | $11,380 ahead |
| 7 | $14,108 ahead |
Compares two fixed-rate loans that are paid on schedule. Principal and interest only: it leaves out taxes, insurance, PMI, any change in your escrow, and cash you might take out. It is not an offer, a quote or advice to refinance.
A worked example
Say you owe $300,000 at 7.5% with 28 years left, and you are considering a new 30-year loan at 6.5% with $6,000 in closing costs paid up front. These are example numbers, not a rate anyone is offering.
- Today: principal and interest is $2,139 a month.
- After refinancing: $1,896 a month, a drop of $242.
- Break-even: $6,000 divided by $242 is about 2 years 1 month.
- If you stay 7 years: counting the interest you no longer pay minus the closing costs, you are about $14,108 ahead.
- If you move after 1 year: you are about $3,012 behind, because the costs have not been earned back yet.
- The trap to watch for: take a different example, $200,000 owed at 6.5% with 15 years left, refinanced into a new 30-year loan at 6.0% with $3,000 rolled into it. The payment falls from $1,742 to $1,217 a month, which looks like a win. But interest from today, if you kept each loan to the end, would be about $235,152 on the new loan versus $113,599 on the old one. A lower payment is not the same as a cheaper loan.
Terms in plain words
- Break-even
- The point where the money saved on your payment has covered the cost of refinancing.
- Rate-and-term refinance
- A new loan that changes your rate, your loan length, or both, without taking cash out.
- Cash-out refinance
- A new, larger loan that pays off the old one and gives you the difference in cash. This calculator does not model it.
- Closing costs
- One-time fees to close the new loan: lender fees, appraisal, title and more.
- Points
- Money paid at closing to lower the rate. One point is 1% of the loan, and it only helps if you keep the loan long enough.
- Lender credit
- The reverse of points: the lender covers some closing costs in exchange for a higher rate.
Points and lender credits as explained by the Consumer Financial Protection Bureau: how to use lender credits and points.
Frequently Asked Questions
What is the refinance break-even point?
How long do I need to stay in the home for a refinance to pay off?
Can a lower payment still cost me more overall?
What does it cost to refinance?
Should I roll closing costs into the new loan?
Is this calculator a quote or advice to refinance?
If it looks worth asking about
Ask a few lenders for an official offer on the same terms, then rerun this with their actual closing costs. See what each lender publishes about refinancing, or work out what your current payment is made of.