How it works
How this tool works.
A refinance is a trade: you pay closing costs today in exchange for a lower payment going forward. Whether that trade wins depends almost entirely on one number — how long you keep the loan. Sell or refinance again before the break-even point and the closing costs ate more than the lower payments saved; hold well past it and the savings compound month after month.
This calculator makes the trade concrete. Enter your current and proposed monthly principal & interest payments and the closing costs, or give it the balance and the two rates and let it compute the payments. It divides the closing costs by the monthly savings to estimate the break-even point in months. The result is an estimate from your inputs — it is not a rate quote, and it deliberately ignores the term-reset effect described in the FAQ, which you should check separately.
Choose an input mode: enter both monthly P&I payments directly, or enter the loan balance, current rate, new rate, and new term.
Enter the total closing costs — lender fees, title, appraisal, and any points you pay to close the new loan.
The tool computes the monthly savings (current payment minus new payment) and divides the closing costs by it.
The result is the estimated break-even point: keep the loan at least that long for the refinance to pay for itself in payment savings.
Make the result useful
Refinance break-even decisions
Existing payment is the comparable current principal-and-interest payment.
New payment must use the proposed loan terms and term length.
Closing costs are cash or financed costs needed to complete refinance.
Holding period determines whether simple break-even is relevant.
The assumptions that move this result
Current payment
Comparable existing payment.
New payment
Proposed refinance payment.
Costs
Lender, title, and other refinance costs.
Term
New amortization term that affects total interest.
break-even months = refinance costs ÷ monthly payment reduction
Use the output as a documented scenario result, not a guarantee.
Read the number in context
Worked scenario
Scenario: $6,000 costs ÷ $200 savings = 30 months.
Edge case
Edge case: a lower payment from restarting a 30-year term can increase total interest.
Does not guarantee rate, approval, future occupancy, or loan costs.
Before you act
• Compare total interest and term.
• Confirm closing estimate.
• Compare holding period with break-even.
Worked formula
break-even months = refinance costs ÷ monthly payment reduction
Is this a forecast?
No. It calculates the assumptions you enter.
Can it replace professional review?
No. Use current records and qualified advice.
What should I save?
Keep the assumptions and source records used for the decision.