When does a refinance pay for itself?
Refinance break-even
Two break-evens, kept apart on purpose. One says when the payment saving repays what you handed over at closing. The other says when the refinance is genuinely cheaper — which a longer term can push out to never.
This compares two notes. It does not model an appraisal coming in low, a rate lock expiring, or the escrow account you will have to fund again.
Your inputs
Not the original term — what is left. A 30-year loan four years in has 26.
Lender fees, title, appraisal, recording. Ask for the Loan Estimate and use the real figure.
Rolling them in means no cash at closing — and a bigger balance, which is why the total-cost break-even moves and the cash-flow one disappears.
Your result
Change in monthly payment
$363.18
lower every month
Cash-flow break-even
15 payments
How long the payment saving takes to repay the cash you handed over at closing.
Total-cost break-even
Payment 16
The first month at which the refinance is genuinely cheaper — interest avoided against everything it cost, including anything rolled into the balance.
The two notes
Over what is left of the old note
Lifetime interest — read with care
The terms differ, so these two numbers cover different lengths of time and are not directly comparable. The equal-horizon figures above are the honest comparison.
Where the two lines cross is the total-cost break-even. If they never cross, the refinance never pays for itself.
A longer term is visible here as a curve that takes much longer to reach the floor.
Take this with you
Every number you entered is in the address bar. Copy the link and it opens with your inputs restored — that is how everything else here shares.
What this assumes
- The current payment is derived from the balance, the rate and the years remaining, which is exactly the payment a fully-amortising note with those three would carry.
- The total-cost break-even compares interest avoided against cash paid plus anything rolled into the balance; it makes no assumption about what you would do with the monthly saving.
- Escrow is ignored on both sides, because it is the same tax and insurance either way.
- No cash-out, no second lien, no rate buy-down.
Demonstration form
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If this were a working site, this is where the conversation would start.