Refinance Breakeven Calculator
Will a refinance actually save you money? Compare your current loan against a new rate and see your monthly savings, breakeven point, and total interest before you pay a single closing cost.
How the Breakeven Math Works
Every refinance is a trade: you exchange upfront closing costs for a different payment and term. The breakeven point is simply closing costs divided by monthly savings — the number of months it takes for the new loan to pay for itself. The shorter the breakeven, the safer the refinance, because life is unpredictable: relocations, rate drops, and cash-out needs can end a loan early.
Watch the term too. Dropping from a 6% to a 5.5% rate looks like pure savings until you notice the new 30-year term restarts the clock on interest you were 10 years into paying down. A good comparison measures total remaining interest on both loans — not just the monthly payment.
Frequently Asked Questions
What is the refinance breakeven point?
The breakeven point is when your cumulative monthly savings from the new loan equal the closing costs you paid to get it. If a refinance saves $200 per month and costs $4,000 in closing costs, you break even in 20 months. If you might sell or refinance again before breakeven, the new loan probably loses you money.
How much lower should my rate be to refinance?
There is no universal rule — the math depends on your balance, term, and closing costs. A common starting point is 0.75% to 1% below your current rate, but on large balances even a 0.5% drop can be worth it, and shortening your term can justify a smaller rate drop because you also cut years of interest.
How much does it cost to refinance?
Typical closing costs run 2% to 5% of the loan amount, covering origination, appraisal, title, and recording fees. Some lenders offer no-closing-cost refis that trade upfront fees for a slightly higher rate.