Refinance Calculator — Break-Even Analysis & Yes/No Recommendation
Calculate whether refinancing your mortgage makes financial sense. Enter your current loan terms, new loan offer, closing costs, and planned stay to get a clear Yes/No/Wait recommendation based on break-even analysis.
Refinance Calculator
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Total Interest Saved (Full Term)
$14,648
Net Benefit Over Planned Stay
$14,641
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After 18 months (break-even point), you save $348.60/mo. Over your planned 60mo stay, you'd save ~$15K.
The Formula
The break-even point is the number of months needed for your monthly savings to accumulate to equal the total closing costs. If you plan to stay in the home longer than this period, refinancing makes financial sense. If you will move before then, the upfront closing costs outweigh the cumulative monthly savings you would receive.
Variable Definitions
Months to Recoup Costs
Closing costs divided by monthly savings. This is the single most critical number in any refinance decision — it tells you how long it takes for the savings to cover the upfront costs.
Reduction in Payment
Old monthly payment minus new monthly payment. Can be negative if extending the loan term cancels out the benefit of a lower rate. Not all lower payments are actually savings.
Interest Rate Reduction
The difference between old and new APR. A 1% drop on a $200,000 loan typically saves about $150/month. However, the actual savings depends on how much time is left on the current loan.
Your Time Horizon
How many months you plan to stay in the home after refinancing. If this is less than the break-even period, do not refinance — you will not recoup the closing costs.
Lifetime Cost Comparison
The net savings in total interest paid over the full life of the new loan compared to the remaining term of the old loan. A lower monthly payment does not always mean lower total interest — resetting the loan term can increase lifetime cost even at a lower rate.
How to Use This Calculator
- 1
Enter your current loan balance and the interest rate you are paying now on your existing mortgage.
- 2
Enter how many months remain on your current loan term.
- 3
Enter the new interest rate you have been quoted and the new loan term you are considering.
- 4
Enter the total refinance closing costs — ask your lender for a formal Loan Estimate document.
- 5
Enter how many months you plan to stay in the home after refinancing.
- 6
Read the bold recommendation at the top. If it says "Yes," refinancing makes financial sense given your time horizon.
Common Applications
- Determine whether refinancing your mortgage makes financial sense by comparing monthly savings against total closing costs.
- Calculate the break-even point where accumulated monthly savings from a lower rate exceed the upfront refinancing costs.
- Compare keeping your current loan versus refinancing to a different term to see which option minimizes total interest over your planned time in the home.
Break-even = closing costs divided by monthly savings. If you stay longer than this period, refinancing pays off. If you move sooner, you lose money.
Understanding the Concept
RefinancingReplacing an existing loan with a new one, typically to secure a lower interest rate, change loan terms, or access equity. is not free — closing costs typically run 2-5% of the loan amount and include origination fees, appraisal costs, title insurance, and recording fees. The key question is whether you will stay in the home long enough for the monthly savings to offset those upfront costs. If your break-even is 24 months and you plan to stay 5 years, refinancing clearly makes sense. If you might move in 18 months, the closing costs will exceed your savings. Importantly, a lower monthly payment obtained by extending the loan term is not always savings — resetting from a 25-year remaining term to a new 30-year term often increases total interest paid even when the rate drops. This calculator factors all of this into a single Yes/No/Wait recommendation.
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