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Refinance Breakeven Calculator

Exact Breakeven Month, Total Savings, and Refinance Recommendation

Enter your remaining balance, current monthly P&I payment, new interest rate, and closing costs to find the exact month your refinance pays for itself. See total interest savings versus your current loan and get a clear yes/no recommendation based on how long you plan to stay.

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How to Use This Calculator

Enter your remaining balance — the principal you currently owe, not the original loan amount.
Enter your current monthly P&I — principal and interest only. Do not include escrow (taxes, insurance, PMI).
Enter your remaining term in years and extra months (e.g. 25 yr 0 mo).
Enter the new interest rate from your lender quote and select the new loan term.
Enter total closing costs — all out-of-pocket fees to close the new loan.
Enter years you plan to stay — how long before you expect to sell or refinance again.
Click Calculate Breakeven. The result shows your breakeven month, monthly savings, net savings at your planned stay, and a recommendation.

How the Breakeven Calculation Works

Monthly savings = current P&I − new P&I. Breakeven months = closing costs ÷ monthly savings.

If closing costs are $5,000 and you save $200/month, you break even in 25 months. Any month beyond that is net savings. If you sell or refinance again before month 25, you lose money on the transaction.

Example: $280,000 remaining, current payment $1,950, 25 years left, refinancing at 6.5% for 30 years with $5,000 closing costs. New payment ≈ $1,770. Monthly savings ≈ $180. Breakeven ≈ 28 months. Net savings over a 7-year stay ≈ $10,120.

Total Interest: Why Monthly Savings Don't Tell the Full Story

A lower rate reduces your payment, but extending the term increases total interest paid. The calculator computes total remaining interest on your current loan and total interest on the new one.

When "Interest Saved (Full Term)" shows a negative number, the new loan costs more in total — typically because the term extension outweighs the rate reduction. This is common when refinancing 5–10 years into a 30-year loan back into another 30-year term. You might save $180/month while adding $50,000 in total interest cost.

The recommendation is based on net savings during your planned stay — not full-term cost. Both numbers are shown so you can weigh the trade-off.

What This Calculator Does Not Account For

This comparison uses principal and interest only. Escrow changes — property tax adjustments or insurance rate changes — affect total monthly payment but not the P&I comparison. PMI removal or addition is also not modeled.

Closing costs rolled into the new loan increase the balance and reduce monthly savings, making the actual breakeven longer than shown. The result here is optimistic if you're financing closing costs.

Tax deductibility of mortgage interest varies by filing status and income. This estimate does not model tax effects. Cash-out refinances involve a larger new balance and require separate analysis.

FAQ

Refinance Breakeven Questions

Short answers for readers and answer engines.

What is the refinance breakeven point?

The breakeven point is the month at which your accumulated monthly savings equal the closing costs you paid upfront. Before that month, you've spent more than you've saved. After it, every month is net savings.

Should I include taxes and insurance in my current monthly payment?

No. Enter only the principal and interest (P&I) portion — the amount that goes toward the loan itself, not escrow. Taxes and insurance are paid regardless of whether you refinance and don't affect the P&I comparison.

Can a lower rate still cost more total?

Yes, if the new term is longer. Refinancing from 25 years remaining into a new 30-year loan adds five years of interest payments. Even at a lower rate, total interest can exceed what you'd have paid on the original schedule. The calculator shows both monthly savings and the full-term interest comparison so you can see both sides.

What closing costs should I include?

Include all out-of-pocket costs to close the new loan: origination fees, appraisal, title insurance, recording fees, and prepaid interest. Exclude recurring items like homeowners insurance deposits or property tax prepayments, since those are costs you'd pay either way.

What if I roll closing costs into the new loan?

This calculator assumes closing costs are paid out of pocket. Rolling them into the loan increases the new balance and reduces monthly savings — the actual breakeven is longer than shown. If you're rolling them in, treat the result here as optimistic.

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