Refinance break-even calculator
A lower rate is only half the story. Enter your balance, current rate and an offer to see the monthly saving, the closing costs and exactly how many months it takes to come out ahead. Today's average 30-year fixed rate is 7.4%.
Refinancing does not pay off within a reasonable window at these numbers (break-even never). Try a bigger rate drop or lower closing costs.
Rate drop: -0.50%. Figures exclude escrow changes and any discount points.
How the break-even is calculated
Break-even months = total closing costs ÷ monthly saving. For example, if refinancing $400,000 from 7.00% to 7.50% saves $230 a month and costs $9,500 to close, you break even in about 41 months — roughly three and a half years. Stay longer than that and you win; move sooner and you lose money.
The calculator also compares total interest: a new 30-year term restarts the amortization clock, so a smaller monthly payment does not automatically mean less interest.
Popular refinance scenarios
FAQ
When is refinancing worth it?
A common rule of thumb: refinancing pays off if you recover the closing costs in under about 48 months and you plan to stay in the home longer than that. A rate drop of at least 0.75–1.00 percentage point is usually the threshold on a 30-year loan.
What are typical closing costs?
Refinance closing costs usually run 2%–5% of the loan amount (lender fees, appraisal, title, recording). This calculator lets you set both a percentage and a fixed dollar amount, and to choose whether to pay them at closing or roll them into the new loan.
Does a shorter new term change the answer?
Yes. Moving from a 30-year to a 15-year loan usually raises the monthly payment even when the rate drops, but it can cut total interest dramatically. Compare the break-even and the total interest columns before deciding.