Mortgage refinance break-even

How this refinance break-even is built

Refinancing trades upfront costs for a new rate and often a new term. This calculator estimates the new P&I, the monthly savings versus the current loan, and how many months of that savings recoup closing costs. It also shows interest over each path so you do not optimize the payment while restarting a 30-year clock.

Cash-flow break-even

If the new payment is lower:

Break-even months ≈ closing costs ÷ monthly P&I savings

If you sell or refinance again before that month, the closing costs may not have paid for themselves in cash flow. If you keep the loan well past break-even, the monthly savings can still be the right call — or not, if total interest rose because you extended the term.

Term length is the trap

A new 30-year loan can cut the payment while increasing lifetime interest: you re-amortize a remaining balance over a fresh 360 months. Compare total interest remaining on the current loan versus the new loan, not just the draft.

Worked sketch

Remaining balance $280,000, 18 years left at 7.25% versus a new 30-year at 6.25% with $6,000 closing costs. The new payment falls, so cash-flow break-even might look like a modest number of months. Lifetime interest can still rise because you added 12 years of amortization. If you instead refinance to a 15-year at the lower rate, the payment may not fall (or may rise) while interest totals drop. Use the inputs to see which story you are in.

Taxes, insurance, and PMI are not the refinance decision unless those lines actually change. Points can be rolled into the new balance; this model uses the closing-cost field you enter.

Side-by-side: refinance vs stay. Guide: refinance break-even basics.