Mortgage Refinance Decision Tool

Refinance Break-Even Calculator

Q: What costs should I include?

Include applicable lender, appraisal, title, recording and point costs, then subtract lender credits.

Q: Does financing closing costs make refinancing free?

No. Financing costs increases the new principal and usually increases payment and interest.

Q: Is a lower monthly payment always better?

No. Extending the loan term can lower payment while increasing lifetime interest.

Compare your existing mortgage with a proposed refinance and find when monthly savings may recover the cost of refinancing.

Instant resultsBreak-even dateFive-year outlook

Compare your current and new loan

Enter principal-and-interest details. Taxes and homeowners insurance are normally excluded because refinancing may not change them.

How the refinance break-even calculator works

The calculator estimates principal-and-interest payments for your remaining mortgage and the proposed replacement loan. It includes changes in monthly mortgage insurance, subtracts lender credits from points and closing costs, and divides net refinancing costs by the estimated monthly savings.

Break-even months = Net refinancing costs ÷ Monthly payment savings

1. Enter your current loan

Use the outstanding balance, current rate, and actual remaining term.

2. Add the refinance quote

Include the offered rate, new term, points, closing costs, and lender credits.

3. Check your time horizon

Compare the break-even date with how long you expect to keep the new mortgage.

What to consider before refinancing

Ownership period

Refinancing may offer little benefit if you expect to sell or refinance again before breaking even.

Loan term reset

A smaller payment can come from stretching repayment over more years, increasing total interest.

Full loan cost

Compare APR, points, credits, mortgage insurance, cash required, and total interest—not only the rate.

Important: prepaid interest, escrow deposits, property taxes, and homeowners insurance are often cash-flow items rather than true refinancing costs. Review the loan estimate carefully before entering costs.

Frequently asked questions

What is a refinance break-even point?

It is the estimated time required for monthly payment savings to recover the net costs of refinancing. If you leave the loan before that point, the refinance may not recover its upfront cost through payment savings.

What costs should I include?

Include lender origination charges, appraisal and title fees, recording costs, discount points, and other non-recurring refinance charges. Subtract applicable lender credits.

Should escrow deposits be included as closing costs?

Usually not in a simple economic break-even calculation because escrow funds remain allocated to your taxes and insurance. Your closing disclosure may still show them in the cash needed at closing.

Does financing closing costs make refinancing free?

No. Adding costs to the loan reduces cash due upfront but increases principal, the monthly payment, and interest. The calculator adjusts the new loan amount when this option is selected.

Is a lower monthly payment always better?

No. Extending the term can lower the payment while increasing lifetime interest. Compare both the break-even period and the total borrowing cost.