How it works
Compare existing and new scheduled payments. Break-even divides fees by monthly payment reduction.
Worked calculation
Compare a 7% loan with 5.5% refinancing and $4,000 costs. For the sample inputs, the calculator displays these results:
| Original monthly P&I | $1,766.95 |
|---|---|
| New monthly P&I | $1,535.22 |
| Monthly difference | $231.73 |
| Upfront cost | $4,000.00 |
| Simple break-even | 17.2615 months |
Assumptions and limitations
Break-even ignores tax effects, time value of money and differing future loan balances.
Results update as you change inputs. The example figures are illustrative and do not represent current lender quotes or live rates. For important decisions, confirm the applicable terms with an authoritative source.
Further reading and source context
For background and independently maintained guidance, see CFPB refinancing guidance. This source supplies context rather than personalized verification of the calculator output.
How refinancing reaches break-even
Compare the monthly payment difference with actual lender closing costs and consider how many months you expect to retain the mortgage. Restarting the term can increase lifetime interest even when the new monthly payment is lower.
Costs the estimate cannot capture
Rate locks, discount points, escrow adjustments, cash-out changes and prepayment fees depend on the lender and property. Use the loan estimate for actual fees.