Refinance Break Even Calculator

What Is a Refinance Break-Even Point?

The refinance break-even point is the exact time period it takes for monthly mortgage savings to offset the total closing costs of refinancing your loan. After reaching break-even, all future monthly savings become net financial profit.

How to Calculate Refinance Break-Even Period

The basic formula for calculating refinancing break-even months is simple:

$$\text{Break-Even (Months)} = \frac{\text{Closing Costs}}{\text{Current Monthly Payment} - \text{New Monthly Payment}}$$

Frequently Asked Questions

How long does it usually take to break even on a mortgage refinance?

Most homeowners reach break-even between 18 and 36 months, depending on closing costs and the magnitude of the rate reduction.

Is refinancing worth it if I move before breaking even?

Generally no. If you sell or move before reaching break-even, the cumulative monthly savings will not cover your upfront closing costs.

Can closing costs be rolled into the loan balance?

Yes, no-closing-cost refinances often roll fees into the loan balance or increase the interest rate slightly, which shifts the break-even calculation.

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What Is a Refinance Break-Even Point?

How to Calculate Refinance Break-Even Period

Frequently Asked Questions

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