Refinance calculator

Refinancing your mortgage almost always costs money up front, but it can lower your monthly payment for years to come. The question that actually matters is simple: how long until the monthly savings pay back what the refinance costs? That moment is your break-even point, and this calculator finds it.

How the break-even is calculated

Enter your current monthly payment, the new payment you have been quoted, and the total closing costs. The difference between the two payments is your monthly savings. Divide your closing costs by that number and round up, and you have the break-even month — the point where the refinance has paid for itself. From then on, the lower payment is a genuine gain.

Suppose you pay $1,500 a month now and a refinance drops it to $1,350. That is $150 saved every month. With $4,500 in closing costs, you recover them in 30 months — two and a half years. Over five years you save $9,000 in payments against $4,500 in costs, so you come out $4,500 ahead. If your closing costs were $5,400 and the payment fell to $1,320 instead, the savings of $180 a month would still break even at month 30, and the five-year net would be $5,400.

How big a rate drop do you actually need?

The old "refinance only for a full point" rule is too blunt, because what matters is the dollar saving against your closing costs, not the rate by itself. The size of your loan changes everything. On a $300,000 balance with 30 years left, dropping from 7% to 6% takes the payment from about $1,996 to $1,799 — roughly $197 a month. Against $6,000 in closing costs that breaks even at month 31.

Shrink the drop to half a point, 7% to 6.5%, and the saving falls to about $100 a month. Now $5,000 in closing costs takes about 51 months — over four years — to recover. A quarter-point move saves only about $50 a month on that balance, which rarely clears typical closing costs before you would move or refinance again. The smaller your balance, the larger the rate drop you need to make the math work.

The trap: a lower payment that costs more interest

A refinance resets the clock, and that is where a tempting monthly number can hide a worse deal. Say you are five years into a 30-year $300,000 loan at 7%. Your balance is about $282,000, and keeping the old loan would cost roughly $316,000 in remaining interest over the last 25 years.

Refinance that balance into a fresh 30-year loan at 6% and the payment drops to about $1,693 — real monthly relief. But you have stretched the debt back out to 30 years, so total interest on the new loan is about $327,000, slightly more than if you had done nothing. The lower payment felt like a win, yet you would pay more over time. Refinancing into a 25-year term instead keeps your original payoff date, lifts the payment to about $1,819, and cuts remaining interest to about $263,000. This calculator measures cash flow and break-even, so when a longer term is in play, check the lifetime interest with a mortgage calculator too.

Good to know

• Compare the break-even month to how long you plan to stay in the home. Selling before break-even usually means the refinance was not worth it.
• Closing costs commonly run 2% to 5% of the loan — about $6,000 to $15,000 on a $300,000 refinance. Include every up-front fee, including any discount points, so the break-even is honest.
• Rolling closing costs into the new balance instead of paying cash hides them from this break-even but adds interest to the loan.
• A lower payment from a longer term can still cost more in total interest, as the example above shows. This tool measures cash flow, not lifetime interest.

Frequently asked questions

Last reviewed June 2026. This tool is for education, not financial advice.