How long until the new rate earns back the closing costs?

Refinancing is a trade: pay closing costs today, get a smaller payment for the rest of the loan. The break-even is the month you stop being underwater on the deal — if you’ll still be in the house then, refi. If not, don’t.

Your loan, two ways

break-even months

Current loan

Remaining balance

Current rate

Years remaining

yrs

New loan

New rate

New term

yrs

Closing costs origination, appraisal, title

Plans

Years you’ll keep this house

yrs

// break-even point

You break even in — months — and you’re keeping the house long enough.

— months to recoup

Current payment

$—

principal & interest

New payment

$—

↓ — / month

Cumulative savings vs. closing costs

Monthly savings$—

Annual savings$—

Closing costs$—

Net savings if you stay 8 yrs$—

Before you sign

The break-even is necessary, but it’s not sufficient.

Watch the term reset

A new 30-year on year 4 of an old 30-year hands the bank four extra years of interest. The monthly drops, but lifetime cost may rise. Match the payoff date if you can.

ii.

Roll-in costs aren’t free

“No closing costs” usually means a higher rate or fees added to the principal. Either way you’re paying — the calculator above just makes it visible.

iii.

Lock period matters

Rates can move 0.25% in a week. A locked rate buys certainty for 30–60 days; an unlocked one is just today’s quote. Ask before you start the application.

// note The break-even shown is the simple payback (closing costs ÷ monthly savings). The chart adds opportunity-cost framing by plotting cumulative savings vs. the flat closing-cost line.