The break-even math
Break-even months = closing costs ÷ (old payment − new payment)
If refinancing costs $6,000 and drops your payment by $250/month, you break even in 24 months. Stay longer than that and every month is net savings; move or refinance again sooner and you lost money on the deal.
What this calculator shows
- Your new monthly payment at the new rate and term
- Monthly savings versus your current payment
- Break-even point in months and years
- Net savings after five years, after subtracting closing costs
Beyond the break-even point
The simple break-even ignores two things worth a second look:
- Term reset. A new 30-year loan stretches repayment out again. If you’re several years into your current mortgage, ask the lender for a 20- or 15-year term, or keep paying your old (higher) payment amount so the extra goes to principal.
- Cash-out. Rolling costs or cash into the balance raises it — make sure the “new balance” field reflects what you’ll actually owe.
Rules of thumb
- A break-even under ~2 years is clearly worth it if you’re staying put.
- 2–4 years: worth it for most people who don’t plan to move soon.
- Over 5 years: only if you’re confident you’ll keep the loan a long time, or the monthly relief matters right now.
If you’re weighing paying discount points to buy the rate down further, run the mortgage points calculator too.