Refinance Break-Even Calculator
Find out how long it takes to recoup your refinance closing costs and whether refinancing makes financial sense for your situation.
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Typically 2-5% of loan amount. Includes lender fees, appraisal, title, etc.
With the current inputs, refinancing would not save you money. Try adjusting the new rate lower or increasing the remaining term.
Understanding the Refinance Break-Even Point
What Is Break-Even?
The number of months it takes for your monthly savings to equal your total closing costs. After this point, you're saving money every month.
When to Refinance
If your break-even point is 24 months and you plan to stay 5+ years, refinancing likely makes sense. The shorter the break-even, the better.
Costs Involved
Refinance costs typically run 2-5% of the loan amount, including lender fees, appraisal, title insurance, and recording fees.
When Does It Make Sense to Refinance?
Rate Drop of 0.5% or More
Even a half-point drop can save hundreds per month on a large loan balance. The bigger the drop, the faster your break-even.
You Plan to Stay Long-Term
If your break-even point is 18 months and you plan to stay 10 years, you'll save for 8.5 years beyond the break-even point.
Remove Mortgage Insurance
If your home has appreciated and you now have 20%+ equity, refinancing can eliminate PMI and significantly lower your payment.
Switch to a Fixed Rate
If you have an adjustable-rate mortgage and rates could rise, locking in a fixed rate provides stability and predictability.
Frequently Asked Questions
What is a refinance break-even point?
The break-even point is how many months it takes for your monthly savings from a lower rate to fully recoup the closing costs of the refinance. After that point, every dollar saved is pure profit. For example, if you save $200/month and closing costs are $4,000, your break-even point is 20 months.
When does it make sense to refinance your mortgage?
Refinancing typically makes sense when: (1) you can lower your rate by at least 0.5-1%, (2) you plan to stay in the home longer than your break-even period, (3) you want to switch from an adjustable to fixed rate, or (4) you need to remove mortgage insurance. The shorter your break-even period relative to how long you plan to keep the home, the more beneficial the refinance.
What costs are involved in refinancing?
Typical refinance closing costs include: lender origination fees, appraisal ($400-600), title insurance and search fees, recording fees, credit report fees, and possibly points. Total closing costs usually run 2-5% of the loan amount. Some lenders offer "no-closing-cost" options by rolling costs into the rate.
How much does it cost to refinance in Utah?
In Utah, typical refinance closing costs range from $3,000 to $8,000 depending on loan size. This includes lender fees, appraisal, title insurance, and recording fees. Property taxes are generally lower in Utah than national averages, which can make the overall cost more favorable.
Can I refinance with little or no equity?
Conventional refinances typically require at least 3-5% equity, and 20% to avoid PMI. FHA Streamline refinances are available with minimal documentation if you have an existing FHA loan. VA Interest Rate Reduction Refinance Loans (IRRRLs) are available to eligible veterans with flexible equity requirements.
Does refinancing reset my loan term?
It depends on the term you choose. If you have 25 years left and refinance into a new 30-year mortgage, you restart the clock. However, you can refinance into a shorter term (like 20 or 15 years) to stay on track or pay off faster. Our calculator lets you model different remaining terms.
Ready to See Your Actual Savings?
Calculators provide estimates, but your actual refinance savings depend on your credit profile, current loan terms, and today's rates. Let's get you a personalized quote.
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