// when does the new rate pay for itself?
Refinancing costs money before it saves money.
Closing costs are paid on day one; the lower rate pays you back month by
month. Find the exact month you break even — and whether resetting the term quietly costs
you more over a lifetime.
✓ No lender ads · No lead forms · Just the math
The two questions every refinance must answer
1. How long until I break even? Closing costs (typically 2–5% of the loan) are paid
up front; the lower rate repays you gradually. The break-even month above is where the green
curve crosses below the red one. If you might sell or refinance again before then, the deal
loses money no matter how good the rate sounds.
2. What happens over the whole life of the loan? This is where most refinance
calculators go quiet. A lower payment achieved by stretching 26 remaining years back to 30
means four extra years of interest — the monthly saving can mask a five-figure lifetime
loss. The verdict line above compares full lifetimes including closing costs, and flags the
term-reset trap explicitly. The honest fix is often refinancing into a term that matches your
remaining years, which keeps all of the rate savings and none of the stretch.
Frequently asked questions
What is the refinance break-even point?
The month when your accumulated interest savings from the new, lower rate exceed the closing costs you paid to get it. Before that month, refinancing has cost you money; after it, you're ahead — if you keep the loan that long.
Why does the new loan's term matter so much?
Refinancing 24 remaining years into a fresh 30-year loan lowers the payment but restarts the clock — you can pay less per month and still pay more interest over your lifetime. This calculator shows both numbers so the term-reset trap is visible.
What closing costs should I include?
Origination fees, appraisal, title work, and any points — typically 2–5% of the loan. If costs are rolled into the new balance rather than paid in cash, your true cost is slightly higher than the figure entered here.
Should I refinance if I might move soon?
Compare your expected time in the home against the break-even month above. Selling before break-even means the refinance lost money, regardless of the lower rate.
Does a 'no-closing-cost' refinance change the math?
Those costs aren't waived — they're moved into a higher rate or the balance. Enter the rate you're actually offered and any rolled-in amount as closing costs for an honest comparison.