Refinance break-even calculator

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Estimate how long it takes for a refinance to pay for itself. Enter your current payment, your new rate and term, and closing costs to see monthly savings and break-even time (principal and interest only).

Use the loan payment only (principal is what you owe, interest is the charge for borrowing). Do not include taxes or insurance.
Points are an upfront cost. Example: 1 point is about 1% of the loan amount.
Roll closing costs and points into the new loan
If on, upfront costs are $0 here, but the loan amount is higher.
If blank, the break-even date is not shown.
Show estimated after-tax break-even
Uses your tax rate on interest only (real tax rules vary).

How to use this calculator

  1. Enter your current monthly payment for principal and interest only. Do not include property tax or homeowners insurance.
  2. Enter your remaining loan balance (how much you still owe today).
  3. Enter the new interest rate (APR) you think you could get, and choose the new loan term.
  4. Enter your closing costs (fees you pay to refinance). These can include lender fees, title fees, and appraisal fees.
  5. If you might pay points or take cash-out, open Advanced options:
    • Discount points: an upfront cost, usually priced as a percent of the loan amount.
    • Cash-out amount: extra money you borrow, which increases the new loan amount.
    • Roll costs into the loan: means you finance the costs instead of paying them upfront.
    • Refinance month: optional, used only to show a calendar break-even date.
    • After-tax break-even: optional estimate that depends on your tax situation. Real tax rules vary.
  6. Press Calculate. Read the break-even time and the chart. Break-even means your monthly savings have added up to the upfront costs you paid.

This is a principal-and-interest comparison. It does not include taxes, insurance, or HOA dues. It also does not predict your exact lender fees or approval.

Definitions

  • Refinance: replacing your current mortgage with a new one.
  • Principal: the amount you still owe (your balance).
  • Interest: the cost of borrowing money.
  • APR: annual percentage rate (your yearly interest rate as a percent).
  • Loan term: how long the loan is scheduled to last (like 15 years or 30 years).
  • Closing costs: fees you pay to get the new loan.
  • Points: an extra upfront cost, usually 1 point = 1% of the loan amount.
  • Cash-out: taking extra money from your home equity (equity is home value minus what you owe).
  • Roll costs into the loan: adding costs to the loan amount instead of paying them upfront.
  • Break-even: the point where savings from a lower payment have matched the upfront costs (in this calculator, using principal-and-interest cash out).
  • After-tax break-even: a rough estimate that assumes some interest reduces taxes. Many people do not get a full deduction.
Methodology and sources
What this calculator answers

It estimates how many months it takes for your monthly payment savings (principal and interest only) to add up to your upfront refinance costs (closing costs and points, if paid upfront). It also shows a simple cumulative cash-out chart using those monthly payments.

Inputs and how they are used
  • Current monthly payment: used as your baseline monthly cash out (principal and interest only).
  • Remaining balance: used to set the base amount of the new loan (before costs and cash-out).
  • New APR and new term: used to calculate the new monthly payment with the standard amortisation formula.
  • Closing costs: added to upfront costs, unless you choose to roll costs into the loan.
  • Discount points (%): converted to a dollar cost as a percent of (balance + cash-out).
  • Cash-out: added to the new loan amount.
  • Roll costs into the loan: moves costs from upfront to the new loan amount (which increases the new payment).
  • Refinance month (optional): used to convert break-even months into an estimated month and year.
  • After-tax toggle (optional): shows a rough “after-tax” break-even estimate (see notes below).
Math used

1) New loan amount:

baseNewPrincipal = balance + cashOut pointsCost = baseNewPrincipal * (pointsPct / 100) if rollCostsIntoLoan: financedCosts = closingCosts + pointsCost upfrontCosts = 0 else: financedCosts = 0 upfrontCosts = closingCosts + pointsCost newPrincipal = baseNewPrincipal + financedCosts

2) New monthly payment (principal and interest):

r = (APR / 100) / 12 n = termYears * 12 payment = P * r * (1 + r)^n / ((1 + r)^n – 1) (If r = 0: payment = P / n)

3) Monthly savings:

savings = currentPayment – newPayment

4) Break-even time (simple payback):

If savings <= 0: no break-even If upfrontCosts <= 0: break-even = 0 months Else: break-evenMonths = ceil(upfrontCosts / savings)

5) Break-even date (optional):

breakEvenDate = refinanceMonth + breakEvenMonths
What is included and excluded

Included: principal-and-interest payments, and upfront refinance costs if you do not roll them into the loan. Excluded: taxes, insurance, escrow changes, appraisal timing, prepayment penalties, and differences in payoff timing.

Break-even here is a cash-flow view. It does not measure whether the refinance is “better” for your total interest paid, your time to payoff, or your equity path. It is a quick payback estimate.

After-tax estimate (optional toggle)

The after-tax line is intentionally labelled as a rough estimate. It reduces the new payment by (taxRate * first-month interest on the new loan). This calculator does not ask for your current APR, so it cannot compare current vs new interest deductions in a consistent way. Real tax outcomes depend on itemising, deduction limits, and IRS rules.

Sources
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