How to find a refinance break-even
Compare the payment saving with the upfront cost.
1
Enter the current loan
Use the remaining balance, rate and term.
2
Add the new rate
Use a quoted rate for the same remaining term.
3
Include all closing costs
Divide the costs by the monthly saving to get the break-even month.
What does this tool do?
Refinancing lowers the rate but costs money upfront. Dividing the closing costs by the monthly payment saving gives the break-even point.
The Formula
Break-even months = Closing costs ÷ (Old payment − New payment)Frequently Asked Questions
Should I refinance if I plan to move soon?
Only if the break-even point comes before the sale. Otherwise the upfront cost may not be recovered.
Does a lower payment always mean a better deal?
No. Extending the term can lower the payment while increasing total interest. Compare both.