Calculators
Break-even refinance calculator
A refinance costs money to close. Whether it's worth doing comes down to one comparison: how many months of payment savings it takes to recoup those closing costs, against how long you actually plan to hold the loan.
Run the numbers
Both rates, both terms and the closing costs are assumptions — set them to the actual quote.
Assumes the new loan is sized to the current balance (a rate-and-term refinance, no cash out) and compares payment to payment. Adding cash out on the same refinance increases the new loan amount and therefore the new payment — rerun the max cash-out calculator first if that's part of the plan, and use its resulting payment here instead.
What this measures and how it's computed
Current and new monthly principal-and-interest payments are each computed from a standard amortization formula against the loan balance, rate and remaining term entered above. Monthly savings is current payment minus new payment. Break-even is total closing costs divided by that monthly savings — the number of months of lower payments it takes before the refinance has paid for the cost of doing it.
How it's used in an underwriting decision
This isn't a lender qualification metric — it's the investor's own decision after qualification. A refinance can make sense on paper (lower rate, lower payment) and still be a bad move if the expected hold is shorter than the break-even period, or if the plan is to sell or refinance again soon. It can also make sense even with a slow break-even if the real goal isn't the monthly savings at all, but something else the refinance enables — removing a co-borrower, changing loan structure, or resetting the DSCR calculation with a lower payment ahead of a sale.
What this doesn't capture
- Cash out folded into the same refinance. This tool assumes the new loan simply replaces the old balance. A cash-out refinance increases the loan size and the new payment, which changes the math — see the note above.
- Points paid to buy down the new rate. If the closing costs entered include discount points, the effective break-even calculation is the same, but it's worth checking what rate you'd get without paying points as a separate comparison.
- Tax deductibility of interest or points. This is a pre-tax cash comparison only.
- Where the new loan's amortization resets. A 30-year refinance on a loan that had 15 years left restarts the clock — lower monthly payment, but more total interest paid over the life of the loan even where the rate is lower. This tool answers the monthly cash-flow question, not the total-interest question.