Refinance Break-Even Point Calculator

The break-even point is the closing costs divided by the monthly saving. Refinancing $300,000 from 7% to 6% on the same 25 years lowers the payment by $187.43 a month, so $9,000 of closing costs are paid back in 49 months (4 years 1 month).

Enter your own balance, rates, term and closing costs below, then see how the rate drop and the cost move the answer.

Refinance break-even calculator

Payment now $2,120.34, after the refinance $1,932.90.

You save $187.43 a month and break even after 49 months (4 years 1 month).

Interest over the full terms: $336,101 now against $279,871 after, plus $9,000 of closing costs.

How much the rate drop matters

Each row is $300,000 at 7% with 25 years left, refinanced for the same 25 years with $9,000 of closing costs.

New rateNew paymentSaved a monthBreak-even
6.50%$2,025.62$94.7296 months
6.25%$1,979.01$141.3364 months
6.00%$1,932.90$187.4349 months
5.50%$1,842.26$278.0833 months

How much the closing costs matter

Same loan, refinanced to 6%. The closing costs set how long the saving takes to cover them.

Closing costsShare of the loanBreak-even
$6,0002.0%33 months
$9,0003.0%49 months
$12,0004.0%65 months
$15,0005.0%81 months

PNC says refinance closing costs are often estimated at 2% to 5% of the loan amount.

The new term can undo the saving

Refinancing to 6% with a new 30-year term instead of 25 years cuts the payment to $1,798.65 but adds interest: $347,515 over the new term against $279,871 on 25 years. Compare the full cost, not only the payment. For a refinance against a recast on the same loan, use the recast vs refinance calculator.

Frequently asked questions

How do I calculate the break-even point on a refinance?

Divide the closing costs by the monthly saving. On $300,000 at 7% refinanced to 6% for $9,000, the payment falls $187.43 a month, so $9,000 / $187.43 is 49 months.

What is a good break-even point?

A refinance pays off only if you keep the loan past the break-even month. Compare the number with how long you expect to stay in the home: if you may sell sooner, the closing costs are not paid back.

Why does a longer new term change the answer?

A new 30-year term on the example drops the payment to $1,798.65, a saving of $321.69 a month and a break-even of 28 months. But the interest over the full terms rises from $279,871 to $347,515, so the lower payment costs more overall.

Do I add the closing costs to the loan?

If you roll them into the new balance, the payment rises a little and the break-even moves out. Enter the balance with the costs included and set the closing costs to zero to see the payment, or keep them separate to see the break-even.

Is a recast an alternative?

A recast keeps your rate and end date and costs a small fee, so it has no rate drop to break even on. See the recast vs refinance comparison for the two side by side.

Sources

Every figure on this page comes from the pages below. Checked 2026-11-09. Rules change, so confirm with your own servicer.

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