A refinance saves each month but costs upfront. See when you come out ahead.
A refinance break-even calculator shows how many months it takes for a refinance's monthly savings to repay its closing costs, the number that tells you whether refinancing is worth it.
Refinancing lowers your payment but charges closing costs upfront. Divide those costs by the monthly savings and you get the break-even month. Keep the loan past it and you're ahead; sell or refinance again before it and you've lost money. It's the single clearest test of whether a refi makes sense.
A lower rate is only half the picture. Refinancing a loan you're years into back to a fresh 30-year term can lower the payment while raising total interest, because you're stretching the balance over more years again. To truly save, compare lifetime interest, or refinance into a term no longer than what you have left.
When you'll keep the loan past the break-even point, where monthly savings repay the closing costs. A common rule is that the rate drop should be meaningful enough to break even within a couple of years.
Closing costs divided by the monthly payment savings gives the number of months to recoup the cost.
It can. Refinancing into a new 30-year term lowers the payment but may increase total interest. Compare lifetime cost, not just the payment.
See the exact formula and a worked example on our methodology page.