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Refinance break-even

How many months until a refinance has paid for itself?

Illustrative example only — not a rate quote, not an APR offer, and not a commitment to lend.

Your inputs

What you owe today, not what you originally borrowed.

Payments left on the loan you have. 324 is 27 years.

Whatever rate you are actually being shown. This page invents nothing.

Lender fees, title, appraisal, recording — everything it takes to get the new loan.

Nothing out of pocket, but you pay interest on the costs for the whole new term.

The refinance pays for itself in

1 yr 8 mo

Payment 20 is where the cost of getting the new loan has been recovered by the lower payment. Move before then and the refinance loses money; stay past it and it starts making some.An illustration produced by the inputs on this page — not a quote, not an APR, not a commitment to lend.

$341Saved each month$2,711 now against $2,371 after.
$385,000New loan amountThe $6,500 of costs is paid up front, so the balance is unchanged.
$493,412Interest left if you stayWhat the loan you already have still has to collect.
$468,384Interest on the new loanOver the full new term, from the first payment.

The part a lower payment does not tell you

Over everything still to pay, the refinance costs $18,528 less than staying put.

Interest still owed on the current loan$493,412
Interest on the new loan, full term$468,384
Closing costs, if paid rather than financed$6,500
Lifetime difference$18,528

The new term is longer than what is left on the loan you have — 30 yr against 27 yr. A longer term can lower the payment and still cost more overall, because you are paying interest for more months. The lifetime figure above is the one to argue with, not the monthly saving.

Cumulative cost, keeping against refinancing

Every dollar out of your pocket, added up month by month. The refinance line starts above the other one by the closing costs and then climbs more slowly; the month the two meet is the break-even. The window is the first five years, or a little past break-even — the closing costs are too small to see against a whole thirty-year term, which is exactly why break-even is worth drawing on its own.

Keeping the current loan (solid) Refinancing (dashed)

Every payment on the new loan

The schedule the refinance would start you on, from payment one. The loan you have today is not in this table — its remaining interest is in the figures above. Figures are illustrative and assume the rate never changes.

Loading the schedule…

What this page assumes

  • A refinance resets the clock. The new loan starts at payment one of a brand new term, which is the front of an amortization schedule where almost everything is interest. That is the cost that never shows up in a monthly-saving headline.
  • Costs paid up front are money gone today and are what break-even is measured against. Costs rolled into the balance leave nothing out of pocket, so break-even arrives at the first payment — but you then pay interest on those costs for the whole new term, which is why the lifetime figure moves against you.
  • No cash-out is modeled. If you take money out, the new balance is bigger than the box on this page and every figure changes.
  • The new rate is whatever you typed. This page does not know, look up, quote or predict any rate, and nothing here is an APR — APR folds in fees this calculator handles separately.
  • Both loans are treated as fixed-rate and fully amortizing, with every payment on time and no prepayment penalty on the loan being replaced.
  • Taxes, insurance, HOA dues and mortgage insurance are left out entirely. They are usually much the same before and after, so they cancel out of a comparison — but they are still part of what you actually pay.
  • Nothing here accounts for the tax treatment of mortgage interest, which varies by person and by year.
  • Every figure on this page is an illustration produced by your inputs. This site is a demonstration for a fictional lender that cannot lend.

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The address bar already holds every input on this page. Copy it and the result reopens exactly as you left it.

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Talk it through

Send the numbers to a person

On a live site this is where the arithmetic on the refinance break-even calculator turns into a conversation. A loan officer would get what you enter here, along with the inputs already in the link.

This form is a demonstration and does not send anything. There is no server, no database and no third-party form service behind this page. Nothing you type is stored, transmitted or logged, and nobody will call you. If you want to see how the real thing would behave, fill it in — it validates properly and shows the confirmation.

A real enquiry would go to (720) 555-0139 or[email protected] — both invented for this demonstration.