Formula
Refinance break-even formula
Break-even months = closing costs / monthly savingsThe new payment is an amortized principal-and-interest estimate. A positive monthly savings is required for a break-even month.
Refinance Calculator
Use this refinance calculator to compare a current payment with a new estimated payment and see how long closing costs may take to break even.
Planning estimate
Live calculator
Refinance estimate
New monthly payment$1,750.72
Principal and interest estimate for the new loan.
Monthly savings$449.28
Current payment compared with the new estimated payment.
Break-even point14 months
Closing costs entered: $6,000.00.
How to read the break-even point
The new payment is $1,750.72. After $6,000.00 in closing costs, the refinance needs 14 months to break even.
Refinance comparison
Payment, cost, and interest assumptions for the new loan.
| Measure | Estimate |
|---|---|
| Current payment | $2,200.00 |
| New payment | $1,750.72 |
| Monthly savings | $449.28 |
| Closing costs | $6,000.00 |
| New term | 360 months |
| New loan interest | $330,258.68 |
Break-even checkpoints
Net savings after closing costs at common holding periods.
| Point | Net savings |
|---|---|
| 12 months | -$608.62 |
| 24 months | $4,782.75 |
| 36 months | $10,174.13 |
| 60 months | $20,956.89 |
Use this as a planning estimate. Taxes, fees, rates, account terms, provider policies, local rules, and timing can change real-world results.
How to use
Steps
- Enter the current loan balance.
- Enter current monthly payment.
- Enter new rate, term, and closing costs.
- Compare monthly savings with the break-even point.
Example
Sample calculation
Loan balance$300,000
Current payment$2,200
New rate and term5.75% for 30 years
New payment$1,750.72
Break-even14 months
Calculator use
Best for
- Estimating affordability, payment, payoff, interest, APR, refinance, rent, or debt scenarios before a money decision.
- Comparing terms, rates, balances, fees, taxes, insurance, debt payments, or split shares with assumptions visible.
Before relying on it
Check first
- Treating an estimate as an approval, quote, credit decision, payoff statement, tax result, or legal payment obligation.
- Leaving out fees, escrow, insurance, property tax, PMI, minimum payments, compounding, promotional rates, or local rules.
- Comparing scenarios with different time horizons, upfront costs, credit assumptions, or one-time versus monthly costs.
Details
What to know before using the result
Break-evenCosts divided by savings
The break-even month only works when the new payment is lower. If monthly savings are zero or negative, closing costs are not recovered through payment savings.
Term resetLower payment can cost more
A lower monthly payment can come from extending the term, which may increase the time in debt or lifetime interest paid.
Closing costsUpfront or rolled in
Costs paid at closing and costs rolled into the new loan both matter because they affect cash needed, loan balance, or total borrowing cost.
Benchmarks
How to read the result
No savings: No break-even.
If the new payment is higher, closing costs may not be recovered through monthly savings.
Under 24 months: Short break-even.
Often easier to justify if you expect to keep the loan long enough.
Long break-even: Check plans.
A long break-even can be risky if you may sell, move, or refinance again soon.
Calculator accuracy
Methodology and assumptions
Formula, inputs, limitations and review record
Formula
Break-even months = closing costs / monthly savings
Inputs used
Loan balance, Current payment, New rate, New term years, Closing costs
Limitations
Money results are planning estimates. Actual taxes, account terms, rates, fees, timing, local rules, and provider policies can change the real-world result.
Review record
Catalog QA baseline on June 6, 2026. This date marks the catalog-wide automated and editorial QA baseline, not a tool-specific expert review.
Cite this page
Toolkit Shelf. Refinance Calculator. https://toolkitshelf.com/tools/refinance-calculator
FAQ
Common questions
How do I calculate refinance break-even?
Divide closing costs by monthly savings. The result is the number of months needed to recover the closing costs.
Does this include taxes and insurance?
No. It compares principal-and-interest payments only unless those costs are already included in the payment you enter.
Can refinancing still make sense with a higher payment?
Sometimes, such as when shortening the term or changing loan type, but this calculator focuses on monthly savings and break-even.
What should I compare besides break-even?
Compare the new term, total interest, closing costs, and how long you expect to keep the loan. A lower payment can still extend debt.
Leave passwords, account numbers, and private medical or tax information out of your report.