Refinance · 4 min read
How do I calculate the break-even on a refinance?
July 10, 2026 · Written by Bill Egan, NMLS 7342
Short answer
Divide what the refinance costs by how much you save each month. If it costs $3,000 and you save $250 a month, you break even in 12 months. If you will sell or refinance again before that, it does not pay for itself. Count points, title, recording, and prepaid interest in the cost — not just the lender’s origination fee.
01
Why this comes up
A lower payment showed up and it feels like a win, but you cannot tell if the costs come back before you sell, or if stretching the loan back to 30 years is cheating the math.
02
Where this goes wrong
You close a refinance that looks cheaper, then sell in nine months and never recoup title and points. Or the term resets to 30 years, the payment drops, and you pay more interest than if you had done nothing. The “problem” is not the closing — it is the calendar after it.
03
What we do about it
We count points, title, recording, and prepaid interest — not just an origination fee — then divide by monthly principal-and-interest savings. If you will sell before that many months, we will say the refinance does not pay for itself. We will not sell a lower payment that costs more interest over the life of the loan without showing you that tradeoff.
04
How to get ready
Write down what the refinance costs and what you save each month. Twelve months to break even on $3,000 of cost and $250 of savings is the simple version. Use the refinance calculator on this site with your start date and remaining term. It is an estimate, not an offer.