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Refinance Breakeven Flow

Decide if a mortgage refinance pays off by comparing monthly savings against closing costs.

Get monthly savings, break-even months, and lifetime interest impact.

Why this flow matters

"Rates dropped - should I refinance?" depends on the closing-cost math, not the rate alone. This flow shows the exact month your refinance pays for itself, and whether the lifetime interest saved is worth resetting the loan clock.

Diagnosis
On track
Save $283/mo, breaks even in 23 months.
On track

Your diagnosis

Save $283/mo, breaks even in 23 months.

  1. NowGet 3 written quotes - rates and closing costs vary 0.25-0.5% across lenders
  2. SoonAsk for a lender credit to offset closing costs (raises rate ~0.125%)
  3. LaterConsider 15-yr - higher payment but huge lifetime interest savings
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Your inputs

Edit any value - the diagnosis above updates instantly.

How the math works

The exact rules and formulas this flow applies - no black box.

  • 1.Current payment recomputed from balance + current rate + months remaining (no assumption about original loan).
  • 2.New payment uses balance + closing costs as new principal (closing costs typically rolled in).
  • 3.Break-even months = closing costs / monthly savings. Negative savings -> never breaks even.
  • 4.Lifetime interest comparison uses payment x term - principal for both old and new.

How to read your result

  • Break-even < 36 months and you plan to stay 5+ years: refinance is a clear yes.
  • Break-even > 60 months: very rate-dependent - only refinance if you are confident you will not move.
  • Lifetime interest saved < 0 with positive monthly savings: you are saving cash flow but paying more total because the term reset. Watch this trap.

Common questions

How big does the rate drop need to be?

0.75-1.0% is the classic threshold but depends on closing costs and balance. The break-even months is the real metric.

Should I refinance to a shorter term?

If cash flow allows. 30-to-15 refinance saves enormous interest, but raises the payment ~30-40%.

What about cash-out refi?

Different decision - that is using equity as a loan. Compare the cash-out rate to credit alternatives, not to your old mortgage.