Find out how many months it takes to recoup your closing costs and if refinancing actually saves you money
Enter your current rate, new rate, remaining balance and the closing costs of refinancing. The calculator shows your monthly savings and the break-even point — how many months until the savings recover the closing costs. It also projects total savings over the remaining loan life.
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.
Many homeowners only look at the monthly payment and forget about other costs:
Break-even months = total closing costs ÷ monthly savings. Monthly savings is the difference between your current payment and the new payment at the lower rate. Refinancing makes sense when you plan to stay in the home past the break-even point.
Dropping from 7.25% to 6.0% on a typical balance saves $370 per month. With $6,000 in closing costs, the break-even point is about 17 months. If you expect to move within a year, the savings won't cover the costs — the calculator makes that trade-off explicit.
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.
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.