Is Refinancing Worth It? (Break-Even Calculator)

Refinancing is often “worth it” if you save enough each month to recover your closing costs within a time you plan to stay in the home.

How to decide

Monthly savings – How much does your payment drop with the new rate?
Closing costs – How much do you pay upfront (appraisal, title, origination, etc.)?
Break-even – Months (or years) until your cumulative savings equal closing costs.

If you stay in the home past break-even, you’re ahead. If you move or refinance again before then, you may not recover the costs.

Use our refinance calculator to enter your current loan, new rate, and closing costs. It shows monthly savings and break-even.

When refinancing often makes sense

Your new rate is clearly lower and you plan to stay in the home for several years.
You want to shorten the term (e.g., 30 to 15 years) and can afford the higher payment.
You want to cash out for a specific need (e.g., home improvement); then the decision is about that use of funds, not just rate.

When it might not

Closing costs are high and you might move soon.
The rate drop is small and break-even is many years away.
You’re adding years back to the loan (e.g., had 20 years left, refinance to a new 30-year) and total interest goes up even if the payment drops.

Bottom line

Run the numbers with our refinance calculator. Compare break-even and total interest. Then decide based on how long you expect to keep the loan. This is for informational purposes only and not financial advice.