Current loanvsNew loan
Refinance Break-Even Calculator
Enter your current loan and the rate you've been quoted. The verdict shows how many months it takes the lower payment to earn back what refinancing costs, and whether it saves money over the life of the loan.
The refinance itself
You break even in 14 months, saving $362/month after
Over the life of the loan, refinancing saves $25,612 in interest.
Drag to see how sensitive the break-even is to the rate you actually get quoted -- a quarter point can move it by months.
| Current loan | New loan | |
|---|---|---|
| Loan amount | $320,000 | $320,000 |
| Monthly payment | $2,179 | $1,817 |
| Lifetime interest remaining | $359,705 | $334,093 |
| Cash due at closing | — | $5,000 |
How this is calculated
Both payments use the standard fixed-rate amortization formula. Break-even is cash due at closing divided by the monthly savings, rounded up to the next whole month. Lifetime interest is each loan's total payments over its full term minus the amount borrowed.
| New term | New payment | Monthly savings | Break-even | Lifetime interest |
|---|---|---|---|---|
| 15 years | $2,615 | $-436 | mo | $150,640 |
| 20 years | $2,201 | $-23 | mo | $208,297 |
| 30 years | $1,817 | $362 | 14 mo | $334,093 |
Same 5.5% rate, three different terms: a shorter term raises the payment (and can erase the monthly-savings case for refinancing at all) but cuts lifetime interest sharply.
Frequently Asked Questions
How is the break-even point calculated?
Cash paid at closing, divided by the monthly savings. On a $320,000 balance moving from 6.75% to 5.5%, the payment drops from $2,179 to $1,817 -- a saving of $362/month -- so $5,000 in closing costs is recouped in 14 months.
What if I roll closing costs into the new loan instead of paying cash?
Rolling in the $5,000 raises the new loan amount and payment slightly (to $1,845/month instead of $1,817), but there's no cash due at closing, so the break-even is effectively immediate -- every month's saving is real from day one, it's just a smaller saving than paying cash upfront.
Why would refinancing ever cost more in lifetime interest even at a lower rate?
Because resetting the clock on a new 30-year term restarts amortization -- you pay interest for more total years, even at a lower rate. On the default numbers here it still comes out ahead (saving $25,612 over the life of the loan), but a refinance late in your current loan's term, into another full 30 years, can lose money over the full term even with a lower rate.
Is a shorter break-even always better?
Not by itself -- it depends on how long you'll keep the loan. If you refinance again or sell before the break-even month, you never recoup the closing costs. If you're confident you'll hold the loan for years past the break-even, a longer break-even in exchange for a much lower rate can still be the better deal.
Should I compare monthly savings or lifetime interest?
Both, for different questions. Monthly savings and the break-even month answer "does this help my cash flow soon enough to matter." Lifetime interest answers "does this help if I keep the loan to the end." A refinance can win on one and lose on the other, especially when the new term is longer than the time remaining on the old one.
Does this include appraisal, title, or other fees beyond the lender's closing costs?
The closing-costs input is meant to be your all-in cash-to-close figure -- lender fees, title, appraisal, and any prepaid escrow. Your Loan Estimate from the lender lists these separately; add them together before entering the total here.
SidebySideCalc calculators apply standard, published formulas -- loan amortization, future-value-of-annuity, and deductible/coinsurance cost-sharing math -- to the numbers you enter. They are estimates for comparing two paths, not tax, legal, or financial advice: your lender, plan documents, and a tax professional decide the real figures for your situation.