What is a break-even point in refinancing?

The break-even point is the number of months it takes for your monthly savings to cover the closing costs of refinancing. If you plan to stay in your home longer than this period, refinancing is generally worthwhile.

When does refinancing make sense?

Refinancing typically makes sense when you can secure a lower interest rate, reduce your monthly payment, and plan to keep the loan long enough to surpass the break-even point.

What are closing costs when refinancing?

Closing costs include lender fees, appraisal fees, title insurance, and other expenses associated with getting a new loan. They typically range from 2% to 5% of the loan amount.

How are lifetime savings calculated?

Lifetime savings are calculated by subtracting the total cost of the new loan (all new payments plus closing costs) from the total cost of continuing with the current loan over its remaining term.

Does refinancing always save money?

Not always. If the new rate is higher, or if you do not stay long enough to recover the closing costs, refinancing may cost more. Always compare total costs over your expected time horizon.

Refinance Calculator

Overview

Determine if refinancing your mortgage or loan makes financial sense by calculating your break-even point and lifetime savings.

The Refinance Calculator helps you decide whether refinancing your mortgage or loan is worthwhile. Enter your current loan balance, interest rates, terms, and closing costs to see your new monthly payment, how many months it takes to break even on closing costs, and how much you save over the life of the loan.

How to use

Find out if refinancing is right for you in a few simple steps.

Enter your current loan details: Input your remaining loan balance, current interest rate, and number of years left on your loan.
Enter the new loan terms: Provide the new interest rate and loan term offered by your new lender.
Add closing costs: Enter the estimated closing costs for the refinance (typically 2–5% of the loan amount).
Review results: Check your new monthly payment, monthly savings, break-even period, and estimated lifetime savings.

FAQs

What is a break-even point in refinancing?: The break-even point is the number of months it takes for your monthly savings to cover the closing costs of refinancing. If you plan to stay in your home longer than this period, refinancing is generally worthwhile.
When does refinancing make sense?: Refinancing typically makes sense when you can secure a lower interest rate, reduce your monthly payment, and plan to keep the loan long enough to surpass the break-even point.
What are closing costs when refinancing?: Closing costs include lender fees, appraisal fees, title insurance, and other expenses associated with getting a new loan. They typically range from 2% to 5% of the loan amount.
How are lifetime savings calculated?: Lifetime savings are calculated by subtracting the total cost of the new loan (all new payments plus closing costs) from the total cost of continuing with the current loan over its remaining term.
Does refinancing always save money?: Not always. If the new rate is higher, or if you do not stay long enough to recover the closing costs, refinancing may cost more. Always compare total costs over your expected time horizon.