Free mortgage break-even calculator estimates how many months refinance payment savings need to recover your upfront closing costs.
A mortgage refinance break-even calculation estimates how long monthly payment savings must accumulate before they recover the upfront cost of replacing your loan. It is useful when comparing a rate-and-term refinance with your existing mortgage.
Enter current and proposed principal-and-interest payments on the same basis, then add the cash costs you would pay to obtain the new loan. The calculator shows the simple break-even period, monthly and annual payment savings, and net savings over the time you expect to keep the new loan.
This is a screening tool, not a complete refinance analysis. A shorter break-even period can be attractive only if you expect to keep the loan beyond that point and the new loan does not create offsetting costs through a longer term, slower equity growth, or other changed terms.
It is the estimated time for cumulative monthly payment savings to equal the upfront cost of refinancing. Divide total upfront refinance costs by the positive difference between the current and proposed monthly principal-and-interest payments.
Include cash costs required to obtain the new loan, such as origination, appraisal, title, recording, discount-point, and applicable prepayment-penalty charges. Use the lender's Loan Estimate, and do not count a financed cost twice if it is already reflected in the proposed payment.
With positive upfront costs, there is no simple payment-savings break-even when the proposed payment is equal to or higher than the current payment. The calculator returns zero months and shows nonpositive horizon savings so you can recognize that case.
No. A lower payment may result from extending the term, which can increase total interest and slow equity growth. Compare total interest, remaining term, principal balances, taxes, and your moving or refinancing plans in addition to this simple break-even estimate.