Refinance Break-Even Calculator
There are two tests and they often disagree. How long to earn back the costs, and whether it costs less overall. A smaller payment can quietly cost you more, because refinancing usually restarts the clock. Both answers are here.
You break even after
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- Payment now
- $0
- Payment after
- $0
- Saved each month
- $0
- Interest if you stay put
- $0
- Interest if you refinance
- $0
Interest, either way
Both bars are interest over the rest of the loan. Refinancing wins only when the second bar is shorter by more than the fees cost.
Move it and watch
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at {v} for what you still owe
And what you can change
Why your own figure may differ
Every new term, side by side
The shorter the new term, the less the payment falls - but the more you actually save. This is where the restart trap becomes visible.
| New term | Payment | Saved monthly | Saved overall |
|---|
Refinancing a mortgage: real examples
Three refinance offers where the two tests disagree. Click any card to load it.
- A clear win
7% down to 5.5%, same term left
Refinancing into a term matching what is left.
The payment falls and the lifetime cost falls too. This is what refinancing is supposed to look like.
Load this scenario in the calculator → - The restart trap
A smaller payment that costs more
Eight years in, taking a fresh 30-year loan at a slightly better rate.
The payment drops, which feels like winning. The total cost goes up, because you just bought eight extra years of interest.
Load this scenario in the calculator → - Moving soon
Break-even after the move
The same good offer, but you plan to sell in two years.
You never reach the break-even, so the closing costs are simply lost. How long you stay matters more than the rate.
Load this scenario in the calculator →
Common questions about refinancing a mortgage
When is refinancing worth it?
When you keep the house long enough to earn back the closing costs, and when the whole thing does not cost you more overall. Those are two different tests and they can disagree. A lower payment feels like winning while quietly costing you more, if the clock restarts. This tool answers both.
What is the break-even point?
How long it takes for the smaller payment to repay the closing costs. Pay $6,000 to save $200 a month and you break even after 30 months. Move house before then and you have simply lost money. It is the first question to ask, and often the only one people do ask.
Why can a lower rate cost more?
Because refinancing usually restarts the clock. If you are eight years into a 30-year mortgage and take a new 30-year loan, you have just added eight years of interest payments. Even at a better rate the total can be higher. This tool shows both the payment and the lifetime cost so the trade is visible.
How do I avoid restarting the clock?
Refinance into a term close to what you have left rather than a fresh 30 years. If you have 22 years to go, ask about a 20-year loan. The payment will not drop as much, but you keep the rate saving without buying yourself eight extra years of interest.
What counts as closing costs?
Origination or lender fees, appraisal, title work, recording and any points you buy. It commonly runs a few percent of the loan. Some lenders offer a no-cost refinance, which usually means a slightly higher rate instead - the cost is still there, just folded into the rate.
Does refinancing hurt my credit?
Slightly and briefly. The application leaves a mark and the new account lowers the average age of your accounts. Neither is significant next to the money involved. Shopping several lenders within a short window normally counts as a single enquiry.