Refinance Break Even Point Explained

Introduction

The refinance break-even point is when your monthly savings equal your closing costs. Before that, you have not yet recouped what you paid. See Refinance Closing Costs Explained, When to Refinance a Mortgage, and What Is Refinance.

Frequently Asked Questions

What is the refinance break-even point?

The break-even point is when your total monthly savings from the refinance equal the closing costs you paid. After that, you are ahead.

How do I calculate break-even?

Divide your closing costs by your monthly payment savings. Example: $4,000 in costs ÷ $150/month savings = about 27 months to break even.

Why does break-even matter?

If you plan to move or refinance again before break-even, you may not recoup your costs. Refinancing makes more sense if you will stay longer.

What if I roll costs into the loan?

If you finance closing costs, your loan balance increases. Factor that into your true savings. The break-even concept still applies to net savings.