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Calculation details
Planning estimate only, not financial, tax, or legal advice. Verify assumptions and current rules before making decisions.
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What does this calculator estimate?
Mortgage refinance break even calculator: compare closing costs against monthly savings to find when refinancing pays off. Free, editable rates, no signup.
How this calculator works
Formula
Break-even months = closing costs / (old monthly payment - new monthly payment).
Worked example
Refinance $300,000 from 7% (25 yrs) to 5.75% (30 yrs) with $6,000 closing: payments $2,120.34 to $1,750.72, saving $369.62 a month, break-even in 17 months.
Frequently asked questions
What is a mortgage refinance break-even calculator?
It's a free browser-based tool that estimates how many months it will take for your monthly savings from refinancing to cover the upfront closing costs.
How do I calculate my break-even point?
Subtract your new monthly payment from your old one, then divide your total refinance closing costs by that monthly savings. The calculator does this instantly for you.
Do I need to create an account to use the tool?
No, there's no signup required, just enter your loan details and costs, and you'll see your break-even month right away.
Cite this tool
BoringToolsKit. “Mortgage Refinance Break-Even Calculator.” boringtoolskit.com/mortgage-refinance-break-even/. Free to reference in articles, syllabi, and answer posts with a link.
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Worked example: $250,000 at 6.5% refinanced to 5.5%
Take a $250,000 balance with 27 years left at 6.5%, refinanced into a 30-year loan at 5.5% with $4,000 in closing costs. Monthly rate for the old loan is 6.5/1200 = 0.00541667 over 324 payments, giving a principal-and-interest payment of $1,638.89. The new loan uses 5.5/1200 = 0.00458333 over 360 payments, giving $1,419.47. The payment change is 1638.89 - 1419.47 = $219.41 saved per month.
Break-even is 4000 / 219.41 = 18.23 months, rounded up to 19 months. After 19 months of savings (19 x 219.41 = $4,168.79) the $4,000 in closing costs are recovered and everything past that point is net gain. Lifetime comparison: the old loan costs 1638.89 x 324 = $530,999.53 in payments, so interest is $280,999.53. The new loan costs 1419.47 x 360 = $510,999.10 plus the $4,000 costs, so interest plus costs are $265,010.10. The estimated lifetime difference is $15,989.43 saved. Note the trade inside that number: the new loan stretches repayment from 27 to 30 years, which is why the savings are real but smaller than the raw rate drop suggests.
Boundary cases where the answer changes shape
Three inputs flip the result rather than just shifting it. A new rate of 0% pays balance / months: $250,000 over 360 months is $694.44, so savings jump and break-even collapses toward 1 month. A new rate above the old one inverts the whole calculation: at 7.0% the payment is $1,663.26, a $24.37 monthly increase, savings are negative, and the tool reports No payment-savings break-even instead of a number. The same happens on a shorter term: refinancing that 27-year, 6.5% balance into a 15-year loan at 5.5% costs $2,042.71 per month, $403.82 more than today, so there is no payment-based break-even even though lifetime interest drops sharply.
Closing costs move break-even linearly. At $4,000 it is 19 months; at $12,000 (5.5 points on this loan) it stretches to 55 months; at $0 closing cost it is 0 months. Negative or blank entries are clamped to zero by the input parser, so a blank balance makes every payment $0.00 and break-even resolves to the no-savings message rather than an error. Rate precision matters more than it looks: 5.5% yields $1,419.47 while 5.51% yields $1,421.04, a $1.57 monthly swing worth about $565 over 360 months. The lifetime figure also assumes you keep each loan to its full term, so it is an upper bound on savings, not a prediction of what you will actually pay.