Refinance Break-Even Basics
When a lower rate is worth the closing costs — cash-flow break-even vs total interest.
Published
Refinancing trades upfront costs for a (hopefully) lower payment or shorter payoff. The simple cash-flow question: how many months of savings until you recover closing costs?
The break-even shortcut
If the new payment is lower:
Break-even months ≈ closing costs ÷ monthly payment savings
Use the refinance break-even calculator with your remaining balance, current rate (APR) and years left, plus the new rate (APR), new term, and estimated closing costs.
Watch the term length
A 30-year refi can cut the payment but restart amortization, which may increase total interest even if the rate is lower. Compare interest totals, not just the monthly bill.
Try it
Open the calculator and change closing costs. Watch break-even stretch — if you will move before that date, cash-flow savings may not pay for themselves.