What's the formula for the break-even point?

Break-even months = upfront cost ÷ monthly savings. The upfront cost is points + closing costs (paid cash). The monthly savings is your current monthly P&I minus the new (refi) monthly P&I. Once you've stayed in the home that many months, the cumulative savings have covered the upfront cost.

How is monthly P&I calculated?

Standard mortgage amortization: P&I = balance × R × (1+R)^N ÷ ((1+R)^N − 1), where R is the monthly rate (annual ÷ 12) and N is the number of months. The calculator applies this to your current loan (balance, currentRate, yearsRemaining) and the refi (balance, newRate, newTerm) to compute both monthly payments.

What is the 're-amortization trap'?

When you refinance, your new loan typically resets to a 15- or 30-year term. If you've already paid down 5-10 years of your original 30-year loan, refinancing into a fresh 30 means you spend MORE total years paying interest — even at a lower rate. Most online refi calcs don't show this. We compute total lifetime interest under both scenarios and warn explicitly when the refi extends the interest paid.

Should I always refi if my monthly drops?

No — three things have to line up. (1) Monthly savings must be positive (sometimes the refi monthly is HIGHER if the new term is shorter). (2) Break-even must come before you'd move or sell. (3) Lifetime interest delta should be positive (no re-amortization trap), or if negative, you're consciously choosing lower-monthly-now over lower-total-later. The verdict line addresses all three.

Do points always pay back?

Often, but not always. Each point = 1% of loan balance paid upfront, typically lowers your rate by 0.125-0.25 percentage points. Whether they pay back depends on how long you stay: at standard fee structures, points break even around year 4-6. If you're moving before then, skip points; if you're staying 10+ years, points usually save more than they cost.

What if I roll closing costs into the loan instead of paying cash?

Then your loan balance increases by the closing cost amount, and the math shifts. Currently the calculator models cash-up-front to keep the break-even formula clean. To model rolled-in costs, increase your 'Current loan balance' by the closing cost amount and set 'Closing costs' to 0 — the result is approximately equivalent, with a tiny difference because you now pay interest on the closing-cost portion too.

What's a 'good' break-even period?

Industry rule of thumb: under 36 months is strong, 36-48 is standard, 48-60 is marginal, over 60 is risky unless you're certain you'll stay. The calculator's verdict tone reflects exactly these bands. The most important variable, though, isn't the break-even — it's how confidently you can predict you'll stay that long.

Why is my new monthly higher than the current one?

Two common reasons: (1) you're refinancing into a shorter term (e.g. 30 → 15 years) — the rate is lower but you're paying off in half the time, so the monthly is higher. (2) The rate drop isn't large enough to overcome the new starting amortization. Adjust 'New term' to match your remaining term to see an apples-to-apples monthly comparison.

Does the calculator handle ARMs (adjustable-rate mortgages)?

Not directly. ARMs have a fixed-rate intro period followed by adjustments — modeling the post-adjustment rate requires assumptions about future rate movements, which is speculation. Use the current effective rate of your ARM in the 'Current rate' field, but be aware that the math assumes the rate stays put. If your ARM is about to reset, that's often a strong refi case on its own.

Should I shorten the term when I refi?

If you can afford the higher monthly, yes — shortening from 30 to 15 years often saves 60%+ of total interest. The calculator shows lifetime interest under both terms; pick 15 in 'New term' and compare. The trade-off is cash flow flexibility — a 30-year refi keeps the option open to make extra payments without committing to them.

Can I save the scenario for later or share with my spouse?

Yes — click Save under the result to store the scenario in your browser (up to 5). Click Share to copy a URL with your inputs encoded, useful for sending the exact scenario to a partner, lender, or financial advisor. Click Print for a clean 1-page summary you can take to a refi consultation.

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Mortgage Refinance Break-Even Calculator — Should You Refi?

See exactly when a refinance pays for itself, what you save over your remaining stay, and whether the lower monthly hides a longer-term interest trap.

Instant result
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AI insight included

Reviewed by CalcBold EditorialLast verified May 4, 2026Methodology

Break-even timeline

Adjust any input. The grid shows your net savings (or loss) at common stay durations, plus the lifetime-interest comparison including the re-amortization trap when relevant.

Balance ($)Current rate (%)Years remainingNew rate (%)New term (yrs)Points ($)Closing costs ($)

Current monthly P&I

$1,926

Refi monthly P&I

$1,679

Monthly savings

$247

Break-even

18.2 mo

Net savings by stay duration$4,500 upfront

If you stay	Cumulative savings	− Upfront cost	Net	Past break-even?
3 years	$8,897	$4,500	$4,397	Yes
5 years	$14,828	$4,500	$10,328	Yes
7 years	$20,760	$4,500	$16,260	Yes
10 years	$29,657	$4,500	$25,157	Yes
15 years	$44,485	$4,500	$39,985	Yes
20 years	$59,314	$4,500	$54,814	Yes

Total interest — keep current

$343,986

Over remaining 27.0 years

Total interest — refi

$324,347

Refi saves $19,639 in lifetime interest.

Rows shaded green show net positive after refi costs. The re-amortization trap fires when extending the term overrides the lower rate — the lower monthly hides a longer-term interest cost. Decide consciously, not by autopilot.

Embed builderDrop the Refi Break-Even on your site →Free widget · 3 sizes · custom theme · auto-resizes · no signupGet embed code

What This Calculator Does

The mortgage refinance break-even calculator answers the single most important refi question: “Will the lower monthly payment actually save me money, given how long I plan to stay in this home?” You enter your current loan, the refi offer (rate, term, points, closing costs), and your planned stay — the calculator returns the break-even month, your net savings over that stay, and a comparison of total lifetime interest under both scenarios.

Where bank refi calculators are mostly lead-capture forms (give us your email; here’s a generic monthly-savings number), this one surfaces what bank tools quietly omit: the re-amortization trap— when refinancing into a fresh 30-year term extends your total interest paid even at a lower rate. If you’ve been on your current loan for 5+ years, that trap is real and the calculator flags it explicitly in the verdict line and the side-by-side panel.

Live recompute, share via URL, save up to 5 named scenarios. No signup, no email gate, no third-party data sharing — everything runs in your browser.

The Math: Break-Even, Step by Step

Three numbers drive the entire decision:

Where pmt(P, r%, y) is the standard mortgage payment formula P × R × (1+R)^N ÷ ((1+R)^N − 1) with R = r/12/100 and N = y × 12.

The calculator computes both monthlies, takes the difference, and divides the upfront cost by the monthly savings. If you stay in the home longer than the break-even period, the refi nets out positive; shorter and you’ve paid more in upfront costs than you saved.

A Worked Example — “Should I refi from 7% to 6%?”

Suppose you have a $280,000 balance at 7.0% with 27 yearsremaining (you’ve been on the loan 3 years). A lender offers 6.0% on a fresh 30-year term with $0 points and $4,500 in closing costs. You plan to stay 7 more years.

Current monthly P&I: $1,863 (27 years left at 7%)
Refi monthly P&I: $1,679 (30 years at 6%)
Monthly savings: $184
Upfront cost: $4,500
Break-even: $4,500 ÷ $184 ≈ 24 months (2.0 years)
Net savings over your 7-year stay: $184 × 84 − $4,500 ≈ $10,956

On the surface, this is a strong refi: 24-month break-even, $11k net savings. But here’s the catch — total interest under each loan:

Keep current loan to payoff: $1,863/mo × 27 yrs × 12 − $280,000 = $323,392 lifetime interest.
Refi to 30-year at 6%: $1,679/mo × 30 yrs × 12 − $280,000 = $324,440 lifetime interest.

The refi extends total interest paid by $1,048 — even at the lower rate. Why? Because you reset the amortization clock from 27 years remaining to 30 years; the extra 3 years of payments outweigh the 1-percentage-point rate cut. That’s the re-amortization trap. The calculator flags this scenario with a yellow callout in the side-by-side panel and an extra warning line in the verdict.

Now run the same numbers but pick a 27-year refi instead of 30:

Refi monthly P&I (27 yrs, 6%): $1,768
Monthly savings: $1,863 − $1,768 = $95
Break-even: $4,500 ÷ $95 ≈ 47 months (3.9 years)
Lifetime interest: $1,768 × 27 × 12 − $280,000 = $292,432
Lifetime savings vs current: $323,392 − $292,432 = $30,960

Same refi rate, same closing costs — different term selection, very different long-term math. Matching the refi term to your remaining years (or shortening it) is almost always the better move when the monthly difference is bearable.

Reading the Side-by-Side Panel

Below the verdict, the timeline panel renders the comparison at six common stay durations (3, 5, 7, 10, 15, 20 years) in a single glanceable grid. Each row shows:

Cumulative savings at that horizon (monthly savings × months).
Upfront cost(points + closing) — same across all rows, included for the “− upfront cost” visual.
Net = cumulative − upfront. Green when positive, red when negative.
Past break-even?Yes / No flag — the rows where you’ve cleared the break-even hurdle.

Below the table, two cards compare lifetime interest under each scenario. When the refi card turns yellow with a TrendingDown icon, you’re looking at a re-amortization trap — the refi wins on monthly cash flow and on near-term break-even, but loses on total lifetime interest. Decide consciously, not by autopilot.

When to Refinance — and When Not To

Strong refi (green light)

Break-even under 24 months.
Planned stay 5+ years.
New term ≤ current years remaining (avoids re-amortization trap).
Rate drop ≥ 0.75 percentage points.

Standard refi (proceed with care)

Break-even 24–48 months.
Planned stay covers break-even with margin (you’ll stay 1.5× the break-even period).
Rate drop 0.5–0.75 pp.

Don’t refi (red light)

Break-even longer than your planned stay.
New monthly is higher than current (rate not low enough to overcome new amortization start).
Re-amortization trap fires AND you’ll stay long enough that lifetime interest matters.
Rate drop under 0.5 pp — usually doesn’t justify the closing costs unless the loan balance is very large.

Common Mistakes (and How to Avoid Them)

Underestimating the planned stay window.Most people overestimate how long they’ll keep a house — life events (job changes, family changes, market timing) shorten stays. Use the medianUS homeowner stay (around 13 years for owners, 6 years for first-time buyers) as a sanity check, not the best-case “forever home” story.
Ignoring the re-amortization trap. Every bank refi calc starts with monthly savings as the headline. That number is honest about cash flow but misleading about lifetime interest when the new term extends past the current years remaining. Check the lifetime-interest line on every refi.
Rolling closing costs into the loan without thinking. Convenient, but every $1,000 rolled in costs about $2,000 over a 30-year term at 6% (the original $1k plus interest on it). Pay closing in cash when you can.
Buying points without checking the break-even on points.Points have their own break-even — typically 4–6 years at standard fee structures. If you’re moving before then, skip points; the rate cut won’t cover their cost.
Assuming PMI status doesn’t matter. If refinancing pushes you below 80% loan-to-value (because the home appreciated), you may be able to drop PMI on the refi — not modeled here, but worth $150–500/month at typical loan sizes. Check your appraisal-implied LTV before signing.

How This Differs From the Mortgage Calculator

The Mortgage Calculator is for buying a home — it computes monthly PITI (principal, interest, tax, insurance) for a new loan, applies the 28% rule, and warns about PMI. The Refinance Calculator is for an existingloan you’re considering replacing — it compares two amortization paths and tells you the dollar value of the swap. Both use the same underlying amortization math; the inputs and outputs are tuned for very different decisions.

Save and Share

Click Saveunder the result to name the scenario (“Lender A — 6.0%,” “Lender B — 5.875% with points,” “Keep current”) and store it in your browser. Up to 5 saves per calculator. Compare offers side by side before signing.

Click Share to copy a URL with all your inputs encoded into a single parameter. Useful for sending the exact scenario to a partner, your loan officer, or a financial advisor. Click Print for a clean 1-page summary you can take to a refi consultation.

Related Tools

Mortgage Calculator — for new home purchases (computes PITI with property tax, insurance, and PMI).
Loan EMI Calculator — model extra-payment scenarios on the new (refi) loan to see how $200/mo extra shortens the term.
Compound Interest Calculator — if you decide NOT to refi, plug the upfront cost (points + closing) into Compound Interest to see what investing it instead would yield.
Can I Afford This? — sanity-check that the new monthly fits comfortably inside your take-home pay (the 28% rule still applies post-refi).

How to Read the Verdict

Two numbers decide it: break-even month (when cumulative monthly savings cover the closing costs) and net savings over your planned stay. Beat break-even by 2+ years and refi wins; sell before break-even and you’ve burned closing costs for nothing.

Break-even under 30 months AND new rate ≥ 0.75% below current. Refi. The classic rule of thumb still holds — the savings clear closing costs comfortably.
Re-amortization trap flag is yellow. A lower monthly hides higher lifetime interest because you reset the 30-yr clock. Refi to the same remaining term (or shorter), or pay extra principal monthly to neutralize the extension.
Stay length below break-even. Pass — closing costs are sunk before savings recover them. Run the PMI removal calc instead if PMI is on the loan; that’s usually a higher-leverage move.
Cash-out refi.Compare the marginal rate on the cash-out portion against alternative cost (HELOC, taxable investing return). If you’re cash-out at >6% to invest, the math rarely wins.

Frequently Asked Questions

The most common questions we get about this calculator — each answer is kept under 60 words so you can scan.

What's the formula for the break-even point?
Break-even months = upfront cost ÷ monthly savings. The upfront cost is points + closing costs (paid cash). The monthly savings is your current monthly P&I minus the new (refi) monthly P&I. Once you've stayed in the home that many months, the cumulative savings have covered the upfront cost.
How is monthly P&I calculated?
Standard mortgage amortization: P&I = balance × R × (1+R)^N ÷ ((1+R)^N − 1), where R is the monthly rate (annual ÷ 12) and N is the number of months. The calculator applies this to your current loan (balance, currentRate, yearsRemaining) and the refi (balance, newRate, newTerm) to compute both monthly payments.
What is the 're-amortization trap'?
When you refinance, your new loan typically resets to a 15- or 30-year term. If you've already paid down 5-10 years of your original 30-year loan, refinancing into a fresh 30 means you spend MORE total years paying interest — even at a lower rate. Most online refi calcs don't show this. We compute total lifetime interest under both scenarios and warn explicitly when the refi extends the interest paid.
Should I always refi if my monthly drops?
No — three things have to line up. (1) Monthly savings must be positive (sometimes the refi monthly is HIGHER if the new term is shorter). (2) Break-even must come before you'd move or sell. (3) Lifetime interest delta should be positive (no re-amortization trap), or if negative, you're consciously choosing lower-monthly-now over lower-total-later. The verdict line addresses all three.
Do points always pay back?
Often, but not always. Each point = 1% of loan balance paid upfront, typically lowers your rate by 0.125-0.25 percentage points. Whether they pay back depends on how long you stay: at standard fee structures, points break even around year 4-6. If you're moving before then, skip points; if you're staying 10+ years, points usually save more than they cost.
What if I roll closing costs into the loan instead of paying cash?
Then your loan balance increases by the closing cost amount, and the math shifts. Currently the calculator models cash-up-front to keep the break-even formula clean. To model rolled-in costs, increase your 'Current loan balance' by the closing cost amount and set 'Closing costs' to 0 — the result is approximately equivalent, with a tiny difference because you now pay interest on the closing-cost portion too.
What's a 'good' break-even period?
Industry rule of thumb: under 36 months is strong, 36-48 is standard, 48-60 is marginal, over 60 is risky unless you're certain you'll stay. The calculator's verdict tone reflects exactly these bands. The most important variable, though, isn't the break-even — it's how confidently you can predict you'll stay that long.
Why is my new monthly higher than the current one?
Two common reasons: (1) you're refinancing into a shorter term (e.g. 30 → 15 years) — the rate is lower but you're paying off in half the time, so the monthly is higher. (2) The rate drop isn't large enough to overcome the new starting amortization. Adjust 'New term' to match your remaining term to see an apples-to-apples monthly comparison.
Does the calculator handle ARMs (adjustable-rate mortgages)?
Not directly. ARMs have a fixed-rate intro period followed by adjustments — modeling the post-adjustment rate requires assumptions about future rate movements, which is speculation. Use the current effective rate of your ARM in the 'Current rate' field, but be aware that the math assumes the rate stays put. If your ARM is about to reset, that's often a strong refi case on its own.
Should I shorten the term when I refi?
If you can afford the higher monthly, yes — shortening from 30 to 15 years often saves 60%+ of total interest. The calculator shows lifetime interest under both terms; pick 15 in 'New term' and compare. The trade-off is cash flow flexibility — a 30-year refi keeps the option open to make extra payments without committing to them.
How does this differ from the regular Mortgage Calculator?
The Mortgage Calculator is for buying a home — it computes monthly PITI (principal, interest, tax, insurance) for a NEW loan. The Refinance Calculator is for an EXISTING loan you're considering replacing — it compares two amortization paths and tells you the dollar value of the swap. Both use the same underlying amortization math.
Can I save the scenario for later or share with my spouse?
Yes — click Save under the result to store the scenario in your browser (up to 5). Click Share to copy a URL with your inputs encoded, useful for sending the exact scenario to a partner, lender, or financial advisor. Click Print for a clean 1-page summary you can take to a refi consultation.