Refinance Break-Even
Closing costs hurt once. Lower payments help monthly. Here's the month they cross.
Estimates only — not financial advice. Ignores tax effects and assumes you stay for the full comparison.
How to judge a refinance offer
- Enter your current loan. Balance, rate, and years remaining.
- Enter the offer. New rate, new term, and all closing costs.
- Press Calculate. Monthly savings and the break-even month appear.
- Check the fine print: only refinance if you'll stay past break-even — and compare lifetime interest, not just the payment.
Frequently asked questions
What is the break-even point on a refinance?
Closing costs divided by monthly savings. A $7,500 close saving $150/month breaks even in 50 months — stay longer and you profit.
Is a lower rate always worth refinancing?
No. If closing costs are high or you move before break-even, you lose. A longer new term can also raise lifetime interest despite a lower payment.
What are closing costs made of?
Origination fees, appraisal, title insurance, and prepaid items — typically 2–5% of the loan. Points you buy to lower the rate count too.
Does refinancing restart the clock hurt me?
It can. Going from 26 years left to a new 30-year term adds 4 years of payments; the calculator's lifetime-interest line exposes that.
How much lower must the rate be?
The old 1% rule is a myth — it depends on balance, costs, and how long you stay. Run your numbers here instead of rules of thumb.
Is this financial advice?
No. Planning estimates only — a lender or advisor can quote your exact terms.
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