Mortgage Refinance Break-Even Calculator
Find out exactly how many months it will take to recoup your closing costs when refinancing your mortgage.
Understanding Refinance Break-Even
Refinancing a mortgage often lowers your interest rate and monthly payment, but it comes with closing costs. The break-even point is the number of months it takes for your monthly savings to equal the upfront costs of the refinance.
Why It Matters
If your break-even point is 48 months, but you plan to sell the house in 3 years (36 months), refinancing is actually a bad financial decision because you will not have stayed in the loan long enough to recoup the closing costs.
Worked Example
- Current Payment: $1,800/mo
- New Payment: $1,600/mo
- Monthly Savings = $200/mo
- Closing Costs = $4,000
- Break-Even Time = $4,000 / $200 = 20 Months.
Frequently Asked Questions
Should I roll closing costs into the loan?
Rolling closing costs into the new loan balance saves you from paying cash out of pocket, but it means you will pay interest on those closing costs for the next 15 to 30 years, reducing your overall savings.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.