Refinance Break-Even Calculator
Closing costs paid in cash are recovered out of a lower payment, one month at a time. Spending $6,000 to move a $320,000 balance from 7.75% to 6.5% saves $199 a month, so it takes 2 years and 7 months to get the money back. Sell before then and the costs bought nothing.
This estimate does not include property taxes, homeowners insurance, mortgage insurance or HOA dues. Your actual payment obligation will be greater.
These figures are the arithmetic of the assumptions you entered. BEDRWay is not a lender, does not quote rates, and this is not a loan offer, a pre-qualification or a commitment to lend. A licensed loan officer runs your actual numbers.
On this page
How the maths works
months to break even = closing costs ÷ monthly saving
That is the whole formula, and its honesty depends entirely on both terms being real. The costs have to be cash you actually hand over, which is why this page pays them at closing rather than rolling them into the balance. The saving has to be the difference between two payments you would genuinely be making.
Months, not a date
A break-even is stated in months because the variable is how long you keep the loan, not what the calendar says. Two years and seven months means exactly that: keep the loan longer and the refinance was worth doing, sell or refinance again sooner and the costs bought nothing at all.
The number is only useful when it is compared against something. The comparison is not how long the mortgage runs. It is how long you expect to be in the house, which for most people is a great deal shorter.
When there is no break-even
If the new payment is not lower, there is nothing to recover and this page says so in words. That is not a courtesy. A well-known national calculator will report a break-even of 2382 months, which is a hundred and ninety-eight years, and print it in the same box it would use for a good answer.
A refinance can still make sense with no monthly saving: shortening the term, dropping mortgage insurance, or moving off an adjustable rate are all real reasons to pay costs for a payment that does not fall. They are simply not break-even calculations, and a page pretending otherwise would be answering a question you did not ask.
Why this page and the refinance page disagree
They assume different things about the costs, deliberately. The refinance calculator rolls them into the new balance, which is what most people do and what makes the cash due at closing nil. This one has you pay them in cash, because a break-even measures money that left your hands and there is no lump to recover otherwise.
Both arrangements are real and lenders offer both. Rolling costs in has no break-even and a slightly larger balance forever; paying cash has a break-even and a clean loan. Knowing which one you are being quoted is worth asking about explicitly.
The costs that are easy to forget
- Prepaid interest from the closing date to the end of that month.
- A new escrow account, funded before the old one is refunded, which is a timing problem rather than a cost but feels like both.
- Discount points, if the quoted rate assumes them. A rate bought with points is not the same product as one without.
How long the recovery takes at other costs and rates
| Closing costs | At 6.000% | At 6.250% | At 6.500% |
|---|---|---|---|
| $2,000 | 7 months | 9 months | 11 months |
| $4,000 | 1 year, 2 months | 1 year, 5 months | 1 year, 9 months |
| $6,000 | 1 year, 9 months | 2 years, 1 month | 2 years, 7 months |
| $9,000 | 2 years, 7 months | 3 years, 1 month | 3 years, 10 months |
| $12,000 | 3 years, 5 months | 4 years, 1 month | 5 years, 1 month |
This estimate does not include property taxes, homeowners insurance, mortgage insurance or HOA dues. Your actual payment obligation will be greater.
These figures are the arithmetic of the assumptions you entered. BEDRWay is not a lender, does not quote rates, and this is not a loan offer, a pre-qualification or a commitment to lend. A licensed loan officer runs your actual numbers.
Frequently asked questions
What counts as breaking even?
The month in which the accumulated saving equals the cash you spent at closing. Before it the refinance has cost you money; after it, every lower payment is yours. It is stated in months rather than as a date because how long you keep the house is the variable, not the calendar.
What if the new payment is not lower?
Then there is no break-even, and this page says so in words instead of printing a number. A well-known calculator will happily tell you that you break even in 2382 months, which is a hundred and ninety-eight years, with no warning attached.
Why does this page pay the costs in cash when the refinance page rolls them in?
Because a break-even measures money that left your hands. Rolling the costs into the balance spreads them across the term and there is no lump to recover, which makes the question a different one. Both arrangements are real; they answer different things.
Does breaking even in two years mean I should do it?
Only if you will still be there in two years. Selling or refinancing again before the break-even means the costs were spent for a saving you never collected. Match the break-even against how long you actually expect to keep the loan.
Sources
- Freddie Mac Primary Mortgage Market Survey, national weekly average mortgage rates, retrieved 2026-08-24
Last updated: August 25, 2026