Refinance Break-Even Calculator

Calculate refinance break-even from closing costs and monthly savings.

By Konstantin Iakovlev · Updated April 2026 · Source: CFPB — Owning a Home

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Break-Even

25 months

Annual Savings

$2,400.00

Net Savings Projection

After 1 year-$2,600.00
After 2 years-$200.00
After 3 years$2,200.00
After 5 years$7,000.00
After 10 years$19,000.00

Use the Refinance Break-Even Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Refinancing a mortgage carries upfront costs, and the break-even point tells you how many months it takes for the lower payment to pay back those costs. That timeline matters more than usual in 2026, when shifting interest rates and property values can change whether a refinance pays off over the life of the loan. The figure below shows whether today's costs are worth tomorrow's savings.

To find the break-even point, divide your total closing costs by your monthly savings. Closing costs cover every fee tied to the new loan, including appraisal fees, title insurance, and loan origination fees. Your monthly savings are simply the gap between your current mortgage payment and the lower payment you would carry after refinancing.

The calculation deliberately holds your savings steady, so it does not anticipate future rate movements that could widen or narrow the gap. Weigh, too, the opportunity cost of the cash spent on closing costs, since that money could be put to work elsewhere. Many homeowners fixate on the headline rate reduction and overlook the full weight of closing costs, which skews the break-even estimate toward optimism.

Example: Refinancing a $300,000 Mortgage in 2026

  1. 1 Let's say you're refinancing a $300,000 mortgage in March 2026. Your current monthly payment is $1,800. After refinancing, your new monthly payment will be $1,500, resulting in a monthly savings of $300. Your total closing costs for this refinance are $6,000.
  2. 2 To calculate the break-even point, we divide the total closing costs by the monthly savings: $6,000 (Closing Costs) / $300 (Monthly Savings) = 20 months.
  3. 3 In this scenario, your refinance break-even point is 20 months.
  4. 4 This means it will take 20 months of monthly savings to recoup the initial $6,000 spent on closing costs. If you plan to stay in your home for longer than 20 months, this refinance could be a financially sound decision, assuming all other factors remain constant.

Source: CFPB — Owning a Home · Last updated: April 2026

Frequently Asked Questions

How do I calculate the break-even on a refinance?
Divide your total closing costs by your monthly payment savings. If refinancing costs $6,000 and saves $200/month, break-even is 30 months (2.5 years). If you plan to stay in the home at least that long, refinancing makes financial sense.
When is it worth it to refinance?
The old rule of thumb was a 1% rate drop, but the real answer depends on break-even timing. If the break-even is under 3 years and you plan to stay longer, it is likely worth it. Also consider the loan term reset; refinancing into a new 30-year loan extends your total repayment timeline.
What closing costs should I include in the break-even calculation?
Include all refinance costs: origination fee, appraisal, title insurance, recording fees, and any points. Do not count costs you would pay anyway (like homeowners insurance). Subtract any lender credits. Total refinance closing costs typically run 2-5% of the loan amount.

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