Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Put your current balance, rate and the new rate into the calculator below with a realistic closing-cost figure. Then read the refinance hub for the full picture, or, if you are in Michigan, refinancing in Michigan, which covers the state’s costs. A licensed pro will confirm the break-even against real quotes before anything is ordered; get a quote to start.

Figures are examples for illustration only and are not a quote or an offer of credit; your rate, costs and savings depend on your credit, equity, loan type and the day you lock. MortgagePros, LLC, NMLS 1925352, is licensed in 39 states.

Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.

Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.

Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.

Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Using a rate quote without the costs. A lower rate with higher costs can break even later than a slightly higher rate with lower costs. The Loan Estimate shows both; compare the break-even, not the rate.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Rolling the costs in and forgetting them. Financing the $5,500 into the loan means no cash at closing, but the costs are still real, now with interest on them. The break-even calculation is the same either way.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Ignoring the term reset. The example trades 27 remaining years for a new 30. Over the full term the new loan carries less total interest, $446,406 against $509,542 on a fresh 30 years at each rate, but it also runs three years longer. A homeowner who wants to stay on the original schedule can take a 27-year term or pay extra; at 6.50 percent over 27 years the payment is $2,294.44, the saving $93.17 a month, and the break-even stretches to about 59 months.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Comparing the whole payment. Taxes and insurance are the same before and after, so include only principal and interest. If the new escrow is set up differently, the total payment can move for reasons that have nothing to do with the refinance.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Comparing the whole payment. Taxes and insurance are the same before and after, so include only principal and interest. If the new escrow is set up differently, the total payment can move for reasons that have nothing to do with the refinance.
Ignoring the term reset. The example trades 27 remaining years for a new 30. Over the full term the new loan carries less total interest, $446,406 against $509,542 on a fresh 30 years at each rate, but it also runs three years longer. A homeowner who wants to stay on the original schedule can take a 27-year term or pay extra; at 6.50 percent over 27 years the payment is $2,294.44, the saving $93.17 a month, and the break-even stretches to about 59 months.
Rolling the costs in and forgetting them. Financing the $5,500 into the loan means no cash at closing, but the costs are still real, now with interest on them. The break-even calculation is the same either way.
Using a rate quote without the costs. A lower rate with higher costs can break even later than a slightly higher rate with lower costs. The Loan Estimate shows both; compare the break-even, not the rate.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

Comparing the whole payment. Taxes and insurance are the same before and after, so include only principal and interest. If the new escrow is set up differently, the total payment can move for reasons that have nothing to do with the refinance.
Ignoring the term reset. The example trades 27 remaining years for a new 30. Over the full term the new loan carries less total interest, $446,406 against $509,542 on a fresh 30 years at each rate, but it also runs three years longer. A homeowner who wants to stay on the original schedule can take a 27-year term or pay extra; at 6.50 percent over 27 years the payment is $2,294.44, the saving $93.17 a month, and the break-even stretches to about 59 months.
Rolling the costs in and forgetting them. Financing the $5,500 into the loan means no cash at closing, but the costs are still real, now with interest on them. The break-even calculation is the same either way.
Using a rate quote without the costs. A lower rate with higher costs can break even later than a slightly higher rate with lower costs. The Loan Estimate shows both; compare the break-even, not the rate.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Run your own numbers

The break-even point is the month a refinance has paid for itself: the point where the monthly saving has added up to the closing costs. It is the first number to check before refinancing, and the easiest to get wrong. Here is a worked example, the mistakes to avoid, and the other things that matter once you have the number.

The example

A homeowner owes $350,000 on a 30-year fixed loan at 7.25 percent, taken three years ago. A lender offers a new 30-year fixed loan at 6.50 percent with $5,500 in closing costs. Property taxes and insurance do not change, so we compare principal and interest only.

	Current loan	New loan
Balance	$350,000	$350,000
Rate	7.25%	6.50%
Term	30 years, 27 remaining	30 years
Principal and interest	$2,387.62	$2,212.24
Monthly saving	$175.38
Closing costs	$5,500
Break-even	$5,500 ÷ $175.38 = 31.4 months, about 2 years and 7 months

If this homeowner expects to keep the loan for longer than about 31 months, the refinance pays for itself and every month after that is a saving. If they plan to sell or refinance again within two years, it does not, however attractive the lower rate looks.

Four mistakes that distort the number

Comparing the whole payment. Taxes and insurance are the same before and after, so include only principal and interest. If the new escrow is set up differently, the total payment can move for reasons that have nothing to do with the refinance.
Ignoring the term reset. The example trades 27 remaining years for a new 30. Over the full term the new loan carries less total interest, $446,406 against $509,542 on a fresh 30 years at each rate, but it also runs three years longer. A homeowner who wants to stay on the original schedule can take a 27-year term or pay extra; at 6.50 percent over 27 years the payment is $2,294.44, the saving $93.17 a month, and the break-even stretches to about 59 months.
Rolling the costs in and forgetting them. Financing the $5,500 into the loan means no cash at closing, but the costs are still real, now with interest on them. The break-even calculation is the same either way.
Using a rate quote without the costs. A lower rate with higher costs can break even later than a slightly higher rate with lower costs. The Loan Estimate shows both; compare the break-even, not the rate.

When break-even is not the whole answer

The calculation above fits a rate-and-term refinance whose purpose is a lower payment. Other refinances are judged differently.

Dropping FHA mortgage insurance. If the current loan is FHA with less than 10 percent down, the annual premium never ends on its own. A conventional refinance at 80 percent loan-to-value removes it, and that saving goes into the monthly figure alongside any rate change, often turning a marginal break-even into a short one.
Shortening the term. Moving from a 30-year to a 15-year loan usually raises the payment. There is no break-even in the usual sense; the measure is total interest saved against the higher payment you can afford.
Cash-out. The new loan is larger, so the payment often rises. The question is whether the cash does something worth the cost, such as replacing higher-interest debt or paying for work that adds value.
Leaving an adjustable rate. A fixed rate that costs a little more today can be worth it for the certainty, which no break-even captures.

Refinance break-even: a worked example

Run your own numbers

Run your own numbers

Run your own numbers

Run your own numbers

Run your own numbers

Run your own numbers

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

When break-even is not the whole answer

Run your own numbers

The example

Four mistakes that distort the number

When break-even is not the whole answer

Run your own numbers