Refinance Break-Even Calculator
Find out how many months it takes for a refinance to earn back its closing costs. Paying off credit cards or other debt? Put those payments in the first box, too, because the savings come from everything that stops leaving your account. This is an estimate, not a quote.
Estimate, not a quote. This is not a commitment to lend, an offer, or a rate quote. Break-even only compares monthly payments to closing costs. It doesn't show total interest over the life of the loan, which can be higher when a balance is stretched over a longer term. Paying off credit cards or other debt with a mortgage or home equity loan secures that debt with your home. If you can't make the payments, you could lose your home. Jim Duffy, NMLS #35122, ALCOVA Mortgage, LLC, NMLS #40508. Licensed in South Carolina, Georgia, and Florida only. Equal Housing Lender.
Run your number
See what freeing up your cash flow could look like.
Enter a few numbers. Nothing here is a quote or an application. It is an estimate, and you control the assumptions.
Your numbers
Starts with an example. Change any field to make it yours.
Debts you would fold in
Add each balance you want gone, and mark whether it is revolving (cards) or installment (auto, student). Uncheck any you would rather leave out.
New loan assumption
Illustration only, not a quote.
Your month, restated
Updates as you type.
This is a general estimate, not a commitment to lend, an offer, or a rate quote. Actual figures depend on your credit, income, property value, loan program, closing costs, taxes, insurance, and full approval. The estimate compares your current monthly payments to an estimated new payment and does not reflect total interest paid over the life of the loan, which may be higher when debt is spread over a longer term. The debt-free timeline assumes you apply the freed-up amount to the new loan every month and that your rate stays fixed. Months to earn back closing costs divides the estimated closing costs by the estimated monthly cash freed. It is an estimate, not a quote, and it does not account for total interest over the life of the loan.
How to read your refinance break-even
Break-even is the number of months it takes for what you save each month to add up to what you paid to close. Divide the closing costs by the monthly difference and round up. If you plan to stay in the house longer than that, the refinance has time to pay for itself. If you might sell or move sooner, it may not. If the new payment isn't lower at all, there's no break-even. Every result here is an estimate, not a quote.
What counts as closing costs
Use the total from a Loan Estimate if you have one. It usually includes lender fees, the appraisal, title work, recording, and any points, plus prepaid items like interest and escrow deposits. In South Carolina, an attorney is part of the closing. Georgia closings can include the intangible recording tax. Florida charges documentary stamp and intangible taxes on the loan. Don't guess low. A low guess makes break-even look faster than it is. South Carolina attorney closing costs
Break-even when you're paying off debt
Most break-even calculators only compare the old mortgage payment to the new one. If the refinance also pays off credit cards or a personal loan, count those payments too. Put the mortgage payment and the debt payments you'd pay off into "what you pay now." The new house payment can be bigger than the old one and still leave you ahead every month. That monthly difference is what earns back the closing costs. The full calculator below does this for you: list each debt, and it shows the money freed up each month and the months to earn back closing costs. The method is explained step by step in refinance break-even for debt consolidation.
When break-even can fool you
Total interest. A lower payment over a longer term can cost more in interest overall. Break-even doesn't show that.
A low first-mortgage rate. If your current rate is low, a HELOC or home equity loan might pay off the debt without replacing it. See HELOC for debt consolidation vs. cash-out refinance.
The cards fill back up. The savings only last if the paid-off cards stay at zero.
Your home secures the debt. Rolling credit cards into a mortgage or home equity loan puts your home at risk if you can't make the payments.
Refinance break-even questions
What is a good break-even point for a refinance?
One that comes well before you expect to sell or move. There's no single right number. It depends on how long you'll keep the loan.
Do I include taxes and insurance?
Either leave them out of both payments or put them in both. Just keep it consistent.
Should I roll closing costs into the loan?
You can, on many programs, but you still pay for them, plus interest. Count them in break-even either way.
Is this a quote?
No. It's an estimate, not a quote, a commitment to lend, or a rate offer.
If the break-even looks good and you own a home in South Carolina, Georgia, or Florida, let's go over the real numbers. I'm Jim Duffy, NMLS #35122, with ALCOVA Mortgage, NMLS #40508. The calculator works anywhere, but I can only lend in SC, GA, and FL. Equal Housing Lender.
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