Refinance Calculator

What the break-even month really tells you

A refinance almost always has an up-front cost — the closing costs — and a recurring benefit — a lower monthly payment. The break-even month is where those two meet: it's the first month your cumulative monthly savings finally add up to more than what you paid to refinance. Before that month, you're still in the hole. After it, every payment is money you keep. That single number answers "should I refinance?" better than the rate drop alone, because it weighs the savings against the cost of getting them.

The calculator finds it the same way a lender's amortization schedule does: it computes your current and new monthly payments with the standard amortized payment formula, takes the difference as your monthly savings, and finds the first month where those savings cross your closing costs. The chart above draws it — a rising cumulative-savings line climbing to cross the flat closing-costs line at the break-even month.

How the payments are calculated

Each monthly payment uses the fixed-rate mortgage formula M = P · r · (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (your APR divided by 12), and n is the number of months in the term. Your new loan amount is your current balance plus any cash-out you take. The lifetime interest figures multiply each payment by its number of months and subtract the amount borrowed — so you can see whether a lower rate on a longer term actually saves interest overall, or just spreads it out.

Watch the lifetime-interest trap

A lower monthly payment feels like a win, but if you refinance a loan you've already paid down for years into a fresh 30-year term, you can end up paying more total interest even at a lower rate — because you're paying it for more years. That's why this calculator shows both the monthly savings and the lifetime interest difference. Read them together: a refinance that lowers your payment but raises your lifetime interest may still be right if you need the monthly cash flow, but you should make that trade with eyes open.

Related articles

• How to calculate your refinance break-even point — the formula and a worked example.
• When does refinancing actually make sense? — the four questions that decide it.
• No-cost vs. traditional refinance — how to tell which one costs you less.

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Not financial advice. Results are estimates for educational purposes only and assume a fixed rate with no changes over the life of the loan. They do not include property taxes, insurance, PMI, points, or lender-specific fees. Your actual closing costs, rate, and savings depend on your lender, credit, and loan terms — confirm the numbers with your lender before deciding.