Refinance Calculator

The break-even point is the simplest, most widely used way to judge a refinance:

Break-even (months) = closing costs ÷ monthly payment savings

Worked example: a $280,000 loan with 27 years remaining at 7.5% currently costs about $2,073/month. Refinancing into a new 30-year loan at 6.5% with $5,000 in closing costs paid upfront brings the payment down to about $1,770/month — a savings of roughly $303/month. Dividing $5,000 by $303 gives a break-even point of about 17 months. Stay in the loan longer than that, and the refinance saves money overall.

Rolling closing costs into the new loan instead removes the upfront break-even calculation entirely (there's no cash outlay to recover), but it does add interest on that amount for the life of the loan — which this calculator accounts for in the lifetime interest savings figure below the break-even result.

• You'll keep the loan past the break-even point. If you plan to sell or pay off the home before the closing costs are recovered, the refinance loses money overall even with a lower rate.
• The rate drop is meaningful. A smaller rate drop still saves money on a large balance, but the break-even point stretches out further — always check the actual months, not just the rate difference.
• You're not resetting the clock significantly. Refinancing 5 years into a 30-year loan back into a fresh 30-year term can lower your payment while quietly increasing total lifetime interest — this calculator's lifetime savings figure flags that tradeoff directly.
• You need to remove PMI or switch loan types. Reaching 20% equity, moving from an ARM to a fixed rate, or dropping FHA mortgage insurance can justify a refinance even without a large rate drop.