Refinance break-even calculator.

Whether a refinance pays off comes down to two numbers: how much it lowers your monthly payment, and how many months it takes to earn back the closing costs. It also checks total interest, since a lower payment can still cost more over time.

Your current loan

From your latest mortgage statement.

The new loan

Example: 7.40% is the 30-year fixed Freddie Mac average for the week of Oct 15, 2026 (15-year: 6.71%). Use the rate a lender quotes you.

New term
Closing costs

Freddie Mac says refinancing typically costs 3% to 6% of the loan.

3% of $295,000 is $8,850.

Your plans

Until you sell or refinance again.

Is refinancing worth it?

Monthly savings

$232.75

Break-even

39months

  • Current payment$2,275.27
  • New payment$2,042.52
Closing costs$8,850
Ahead after 7 years, after costs$10,701
Interest left on your loan (27 years)$442,188
Interest on the new loan (30 years)$440,307
Lifetime difference, with closing costs−$6,970

You save $232.75 a month and earn back $8,850 in closing costs in 39 months. If you keep the loan 7 years, you come out about $10,701 ahead.

These figures are estimates for planning only and are not an offer or a quote. Payments are principal and interest, before taxes and insurance, and assume closing costs are paid at closing. See our disclosures.

How this is calculated

Both payments use the standard fixed-rate formula on the same balance. The break-even test is the one Freddie Mac describes: costs divided by monthly savings.

  • Each monthly payment

    B × i ÷ (1 − (1 + i)−n)

    B is your balance, i is the yearly rate divided by 12, and n is the months left (current loan) or the new term in months. $295,000 at 8.25% over 324 months is $2,275.27; at 7.40% over 360 months it is $2,042.52.

  • Break-even

    closing costs ÷ monthly savings, rounded up to a whole month

    $8,850 ÷ $232.75 = 38.02, so the costs are fully earned back in month 39.

  • Ahead by the time you move

    monthly savings × months you keep the loan − closing costs

    $232.75 × 84 − $8,850 is about $10,701 after 7 years.

  • Lifetime difference

    interest left on your loan − (interest on the new loan + closing costs)

    Each interest figure is the payment times the number of payments, minus the balance. A negative result means the refinance costs more over the full life of the loans, usually because the new term adds years.

The simple test leaves out how much faster or slower each loan pays down principal, taxes, and any prepayment penalty on your current loan. For the full walk-through with a 0.5% and a 1% rate drop, read when refinancing makes sense.

Sources

  • Freddie Mac, Primary Mortgage Market Survey: 30-year fixed 7.40% and 15-year fixed 6.71%, week of October 15, 2026.
  • Freddie Mac My Home, “Planning to refinance” and “Understanding the costs of refinancing” (accessed October 21, 2026): costs of 3% to 6% of the loan principal and the break-even test.
  • CFPB, “Is there such a thing as a no-cost or no-closing loan or refinancing?” (last reviewed April 3, 2024).

Last reviewed October 22, 2026.

Questions about refinancing

How do you calculate the refinance break-even point?

Divide your total refinancing costs by how much the new loan lowers your monthly payment. The answer is the number of months it takes to earn the costs back. Freddie Mac notes that this simple test does not fit cash-out refinances or refinancing into a shorter term; for those, compare total interest and total cost instead.

How much does it cost to refinance?

Freddie Mac says you can expect to spend 3% to 6% of the loan principal to refinance, depending on your lender, credit score and location. On a $295,000 loan that is $8,850 to $17,700. Your Loan Estimate lists the actual costs for each offer.

Does refinancing restart your loan?

Yes. A refinance is a new loan with a new term. Trading a loan with 27 years left for a new 30-year loan adds 3 years of payments, which can raise the total interest you pay even at a lower rate. A shorter term, or paying your old payment amount on the new loan, avoids that.

Is there such a thing as a no-closing-cost refinance?

Lenders may advertise one, but the CFPB explains that the costs are usually covered by a higher interest rate or added to your loan balance. A higher rate costs more over time, and a higher balance raises your payment. You can test either version here by entering the higher rate or the larger balance.

What if I also want to take cash out?

Then the break-even test does not apply, because the new loan is larger than the old one. Use the cash-out refinance calculator to see your new payment, the cash available at common limits, and how it compares with keeping your mortgage and adding a HELOC.

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