Refinancing costs money upfront. See exactly how many months of lower payments it takes to recover those closing costs, and whether refinancing is worth it for your timeline.
Refinancing replaces your current mortgage with a new one, usually to get a lower rate, but it comes with closing costs similar to your original loan: appraisal fees, title insurance, lender fees, and more. Those costs need to be paid back through your monthly savings before refinancing actually saves you money. This calculator finds that break even point by dividing your closing costs by your monthly payment savings. Every slider on this page has a matching number field: drag to explore, or type exact figures if you already know your numbers.
A short break even period looks appealing, but it doesn't account for how long you actually plan to stay in the home or keep the loan. If you break even in 11 months but plan to sell or refinance again in 8 months, refinancing loses you money even though the break even math looks favorable on paper. The right question isn't just how fast you break even, it's whether you'll still hold the loan by the time you do.
Refinancing into a new 30 year term after you've already paid down several years of your current loan resets the amortization clock, which can lower your monthly payment even without a much better rate, simply by spreading the balance over more years again. That can look like real monthly savings while actually increasing the total interest you pay over the life of the loan. This calculator's lifetime interest comparison is there specifically to catch that tradeoff.
Mortgage refinancing, amortization, and the tradeoffs between monthly payment and total interest cost are core content on real estate licensing exams. Our General Real Estate practice exam covers this content directly, with state specific versions for California, New York, New Jersey, and Pennsylvania. This same amortization math also appears on the CFP exam.
Rolling costs into the loan avoids an upfront cash outlay but means you pay interest on those costs for the life of the new loan, which changes the true break even math. This calculator assumes closing costs are paid out of pocket; rolling them in would extend the effective break even period once that added interest is considered.
Generally yes, since a bigger rate drop produces bigger monthly savings relative to the same closing costs. But the new loan's term matters too. Refinancing into a shorter term can raise your monthly payment even with a lower rate, which would eliminate monthly savings entirely despite the better rate.
Only if you'll hold the new loan past the break even point. If you expect to sell or move before that point, the closing costs likely won't be recovered, and refinancing would cost you money overall despite the lower monthly payment.
Yes. Each slider has a paired number input. Type directly into any gold field to enter a precise figure, and the slider along with all results update immediately.
Mortgage math like this shows up directly on real estate licensing exams. Practice for free.
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