How to use it
- Enter Loan amount.
- Enter Annual rate %.
- Enter Term (years).
The formula
Break-even months = closing costs ÷ monthly saving.
Worked example
If refinancing saves $180/month and costs $3,600, you break even in 20 months.
Frequently asked questions
When is refinancing worth it?
Often when the new rate is roughly 0.75–1% below your current rate and you'll stay past break-even.
Does a longer term help?
It lowers the payment but usually raises total interest.
Tips
- Compare the total interest, not just the monthly payment.
- A larger down payment lowers both the loan and any insurance.
- Even small extra principal payments cut years off the term.
Key terms
- Principal
- The amount borrowed, before interest.
- Amortization
- Spreading repayment into equal periodic payments.
- Escrow
- Funds held for taxes and insurance.