Compare your current mortgage to a new refinance offer and find the break-even point on closing costs.
$
%
%
$
Current Payment
$1,890.58
New Payment
$1,589.81
Monthly Savings
$300.77
Break-even Time
1 yr 5 mo
Closing costs recouped
Net Savings
$103,277.51
Over 30 years minus closing
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Results are estimates only and should not be considered financial advice. Always consult a qualified professional before making financial decisions.
Formula
Monthly = P × r(1+r)^n / ((1+r)^n − 1), then compare current vs new payment. Break-even = closing costs ÷ monthly savings.
Worked Example
Refinancing $280k from 6.5% to 5.5% over 30 years with $5k closing costs: new payment ≈ $1,591, monthly savings ≈ $249, break-even ≈ 21 months.
Frequently Asked Questions
When does refinancing a mortgage make sense?
Refinancing is usually worth it when you can drop your rate by 0.75% or more, or when switching from a 30-year to a 15-year term. It also makes sense if you have a high-rate FHA loan and can drop PMI with a conventional refinance.
What is break-even on a refinance?
Break-even = closing costs ÷ monthly savings. If closing costs are $6,000 and you save $200 per month, it takes 30 months to recoup the cost. If you plan to stay in the home longer than that, the refinance pays for itself.
Do I have to pay closing costs on a refinance?
Most lenders charge closing costs of 2-5% of the loan amount. Some offer 'no-cost' refis, but compensate with a higher interest rate. Always compare the total cost over the life of the loan, not just the monthly payment.
Should I refinance if I plan to move soon?
Only if you will stay long enough to pass the break-even point. A general rule is to stay at least 3-5 years after refinancing to recoup the costs and start saving.
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