Mortgage Refinance Break Even Calculator

What Is a Mortgage Refinance Break Even Point?

The refinance break even point is the number of months it takes for your monthly savings to add up to equal your closing costs. If you plan to stay in your home longer than the break even period, refinancing makes financial sense. If you'll move or sell before breaking even, you'll actually lose money on the deal.

When Does Refinancing Make Sense?

• Rate drops by at least 0.75-1% — smaller savings may not justify closing costs
• You plan to stay 3+ years — longer you stay, more you save
• Closing costs are 2-3% or less — shop around for lenders
• Your credit score has improved — you qualify for much better rates

Hidden Costs of Refinancing

Many homeowners only look at the monthly payment and forget about other costs:

• Closing costs — 2-5% of loan amount on average
• Extended loan term — resetting to 30 years means more total interest
• Appraisal fees — typically $300-$600
• Origination fees — 0.5-1% of loan amount

Frequently Asked Questions

Is it worth refinancing to save $200 a month?

It depends on your closing costs and how long you'll stay. If closing costs are $6,000 and you save $200/month, your break even point is 30 months (2.5 years). If you'll stay 5+ years, it's worth it. If you might move in 2 years, skip it.

How much does 1 percent save on a mortgage?

On a $300,000 30-year mortgage, dropping from 7.5% to 6.5% saves about $200/month, or $72,000 over the life of the loan. Use the calculator above to see your exact savings.