Refinance Calculator — Refinance Break-Even
The decision view: how many months until closing costs are recovered by the smaller payment. $6,000 of costs against the $315.05 monthly saving from a 7.5%→6.25% refinance on $300,000 breaks even at month 20 — keep the loan past that and every further month is profit. The page exists because break-even, not the rate drop, is what decides marginal cases.
Refinance comparison
Break-even point
20 months
saving $315.05 per month after closing costs of $6,000
Breakdown
Lifetime cost saving (interest + closing costs vs staying put): $29,579
Compares the loans you enter, ignoring tax effects and escrow changes. Not a rate quote, lending decision, or financial advice.
Match the break-even to your horizon
Break-even only means something against how long you'll keep the loan. Homeowners hold mortgages for far less than 30 years in practice — moves, upgrades, and serial refinances intervene — so a 20-month break-even is comfortably safe while a 60-month one is a bet on staying put. Run the calculator with your real closing-cost quote rather than a lender's teaser figure; title, escrow, and appraisal fees move the month meaningfully.
When the saving is small, break-even gets fragile fast: halve the monthly saving and the break-even month doubles. That's why quarter-point refinances rarely clear the bar unless closing costs are unusually low or the balance unusually large.
Questions
- What is a good break-even period for a refinance?
- Shorter than the time you're confident you'll keep the loan. Under two years is comfortable for most owners; past four or five years it becomes a bet on not moving or refinancing again.
- What if the new payment isn't lower?
- Then there's no break-even month at all — the calculator reports it as never. A refinance can still make sense for non-payment reasons, like escaping an ARM reset, but the costs won't repay themselves monthly.
More ways to use this calculator
Start with the main refinance calculator or compare the other published scenarios.
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