Mortgage Refinance Break-even Calculator

The break-even point is the number of months it takes for your monthly savings from a lower interest rate to fully offset the closing costs of your refinance. Once you pass that point, you begin to truly save money. If you sell or refinance again before reaching break-even, the refinance will have cost you money net. See also our Mortgage Payment Calculator.

You generally need to stay in your home past the break-even point for a refinance to be financially beneficial. For example, if your break-even is 28 months, you need to remain in the home at least 28 months after closing. The longer you stay beyond that point, the more you save.

Closing costs typically include loan origination fees, appraisal fees, title insurance, attorney fees, and prepaid taxes or insurance. These usually range from 2% to 5% of the loan amount. Ask your lender for a Loan Estimate to get an accurate figure before running the calculation.

If you refinance into a new 30-year mortgage, yes — your loan term resets, which can lower your monthly payment but increase total interest paid over time. Refinancing into a shorter term (like 15 years) can save significant interest but will increase your monthly payment. This calculator lets you choose your new term so you can compare both scenarios. You might also find our use the DSCR Calculator useful.

It depends. In the early years of a mortgage, most of your payment is interest, so refinancing can yield big savings. Later in the loan, your payments are mostly principal, and refinancing into a new 30-year term could actually cost you more in total interest — even at a lower rate. Run the numbers carefully and compare total interest paid.

Origination points (or discount points) are an upfront fee paid to the lender in exchange for a lower interest rate. One point equals 1% of the loan amount. Paying points can reduce your rate and accelerate savings, but they increase your upfront costs and extend your break-even timeline. Use the calculator to see if paying points makes sense for your situation.

A higher credit score generally qualifies you for better refinance rates. Most conventional lenders require a minimum score of around 620, but the best rates are typically reserved for scores of 740 or above. If your credit score has improved since you took out your original mortgage, you may qualify for a significantly lower rate.

A zero closing cost refinance means the lender rolls the closing costs into your loan balance or compensates by giving you a slightly higher interest rate. While this eliminates upfront out-of-pocket expenses, you end up paying more over time either through a larger loan balance or a higher rate. Be sure to factor this in when comparing loan options.