Mortgage Refinance Calculator
Know exactly when
refinancing pays off
Most people refinance based on gut feel and a bank's pitch. This tool shows you the actual math — break-even month, real savings, and whether your rate drop is big enough to matter.
Break-even: Month 19
Refinance Break-Even Calculator
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Verdict
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Cumulative savings vs. closing costs
Your rate drop analysis will appear here after calculating.
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Ready to see what rate you qualify for?
Use the calculator above to confirm refinancing makes sense for you, then compare real rates from vetted lenders. Takes 3 minutes, no hard credit pull.
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The 1% rule is a myth
You've probably heard "only refinance if you can drop your rate by at least 1%." That rule of thumb was invented by lenders, not mathematicians. Whether refinancing makes sense depends entirely on three things: your loan balance, your closing costs, and how long you'll stay in the home.
A 0.5% drop on a $600,000 balance with low closing costs can pay off faster than a 1.5% drop on a $150,000 balance with high closing costs. The math is what matters.
Read: When does refinancing actually make sense? →What "break-even" really means
Refinancing has an upfront cost — typically 2–5% of your loan balance in closing costs. Every month after closing, your lower payment chips away at that cost. The break-even point is the month when cumulative savings finally exceed what you paid to refinance.
If you sell or move before break-even, you lose money on the refi — even if your rate dropped significantly. This is why the calculator asks how long you plan to stay.
Read: How the break-even calculation works →Closing costs they don't advertise
Lenders are required to disclose closing costs, but they're not required to make them easy to find. Common surprises include origination fees (0.5–1% of the loan), discount points sold as "buying down the rate," prepaid interest, and title insurance on a home you already own.
Read: 8 closing cost traps to watch for →Common questions
The break-even and savings figures are mathematically precise given the inputs you provide. The main variable we can't account for is your actual closing costs, which vary by lender and state. Get a Loan Estimate from at least two lenders before deciding — it's a federally required document and lenders must provide it within 3 business days of application.
Not necessarily. If you have 22 years left on a 30-year loan, refinancing into a new 30-year extends your payoff date by 8 years. You'll have a lower payment but pay more total interest. Try comparing a 30-year refi vs. a 15 or 20-year in the calculator — the total interest savings on a shorter term are often striking.
One discount point = 1% of your loan amount paid upfront to permanently reduce your rate (typically by 0.25%). They make sense only if you'll stay long enough for the monthly savings to recover the upfront cost — the same break-even math applies. Run both scenarios in the calculator with and without points.
A hard credit pull typically drops your score 5–10 points temporarily. If you apply with multiple lenders within a 14–45 day window (the exact window varies by scoring model), they're treated as a single inquiry. The score impact is minor and usually recovers within a few months.
A cash-out refi replaces your mortgage with a larger one, giving you the difference in cash. It can make sense for home improvements that add value or consolidating high-interest debt — but it increases your loan balance and resets your amortization. Treat it as a separate decision from a rate-reduction refi.