A lower rate is not automatically a win — refinancing costs real money upfront, and the only question that matters is how long until the monthly savings pay those costs back. Enter your current payment, the new loan terms, and your closing costs above; this calculator gives you the break-even month, free and entirely in your browser.
How to use
- Current monthly payment — the principal-and-interest part of what you pay now (leave out taxes and insurance, which don’t change with a refinance). Your mortgage statement usually breaks this out; otherwise subtract the escrow line from your total payment.
- New loan amount — your current balance, plus any costs you plan to roll in. Rolling costs into the loan raises the new payment slightly, and the calculator will reflect that.
- New rate and term — the offer you’re evaluating.
- Closing costs — origination, appraisal, and title fees from the Loan Estimate; 2–6% of the loan is typical.
The result shows the new payment, your monthly savings, and the number of months until the savings cover the costs. If the new payment isn’t lower, the calculator says the refinance never breaks even rather than inventing a number.
Break-even thinking beats rate-chasing
A refinance from 7% to 6.5% sounds obviously good, but the arithmetic decides. If it saves $150 a month and costs $4,000, you’re behind for 27 months and ahead only afterward — so the real question is whether you’ll still hold this loan in month 28. Planning to sell in two years? The “better” rate loses money. Staying ten years? You bank roughly $14,000 after costs. This is why a smaller rate drop with low fees often beats a bigger drop loaded with points. The URL updates as you type, so you can open two tabs, price two competing offers, and compare their break-even months side by side. Run the mortgage payment calculator on both loans if you want to see the payment math behind each scenario.
The trap the monthly number hides
Break-even on payments is necessary but not sufficient. If you’re eight years into a 30-year loan and refinance into a fresh 30-year term, the payment falls partly because you’ve stretched the remaining balance across more months — and total lifetime interest can rise even as the payment drops. Before committing, compare the full cost of each loan with the amortization schedule calculator: look at total interest from today forward, not the original schedules. Matching the new term to your remaining years (a 20- or 15-year refinance) usually keeps the payment win honest.
Limits
This calculator compares principal-and-interest payments only, and the simple cost-recovery method it uses ignores three second-order effects: the term-reset problem above, the small return you could have earned investing the closing costs instead, and tax effects if you itemize mortgage interest. It also assumes you keep the new loan to break-even — a job move or sale resets everything. Rules of thumb say refinancing “makes sense” after a 0.5–1 point rate drop, but your costs and timeline decide, not the rule. Before you shop offers, check what you can actually borrow with the mortgage affordability calculator, and see the CFPB’s Owning a Home guides for how Loan Estimates present refinance offers side by side.
Browse all our calculators — each shows its formula and sources, so you can verify the math yourself.