Should I Refinance? Break-Even Calculator
See when a smaller monthly P&I payment repays refinance costs paid in cash, assuming equal principal and remaining term on old and new loans.
What This Calculator Does
Before you decide whether to refinance your mortgage, this calculator shows how long a lower monthly principal-and-interest payment takes to earn back the costs you pay out of pocket. It assumes the current and new loans carry the same balance and exactly the same remaining term. A higher new payment shows up as a loss, and so does any cost you haven't recovered yet. Payoff ends the comparison. It won't tell you whether refinancing makes sense overall.
Who Is This For
Use it if you own a home in Florida or work in real estate, your loans carry fixed rates, the refinance costs come out of your pocket, and principal and term stay put. Stick to net costs that are confirmed, not guesses. Set the horizon at a realistic date: a likely sale, the payoff or your next refinance. A different loan setup calls for a separate comparison.
How It Works
Start with the loan balance, the note rates on the existing and replacement loans, and the net refinance costs coming out of your pocket. Next, give the term left on the loan and your expected holding period, both as full years plus months. The tool assumes you cover costs with cash and that balance and term match on the old and new loan. You get back how much the payment drops (+ or −), the period it covers, when you break even, and the net cash difference, which shows losses or a break-even arriving after payoff.
Frequently Asked Questions
What does recovering cash costs mean?
It's how many months of lower P&I payments it takes to repay the cash you laid out. Divide those costs by the monthly P&I saving and round any fraction up to a full month; with no positive saving, there's nothing to compute. Recovering costs isn't profit. Counting ends at your planned horizon or at the payoff date the loans share, whichever arrives earlier.
Should I enter costs I'm adding to the new loan balance?
No, leave them out. This model holds principal equal on old and new loans and expects you to cover costs with cash. Financing the fees pushes the principal up and moves the payment, and listing them as cash paid upfront would bend the result. They aren't free either, so line up the actual balances, payments and costs side by side, apart from this tool.
And if my payment stays the same or goes up?
Then a lower payment isn't there to pay back your costs. When the new payment is higher, the monthly difference turns negative and the cash you lose keeps growing through the period. Equal payments leave the costs sitting unrecovered. Don't read a blank break-even as proof of no reduction, though: look at whether the monthly difference shows + or −, and at the payoff warning.
How should years and holding time be entered?
Enter years as whole numbers and months as 0–11, so 2.0 means 2 years, never 20. The remaining term has to add up to 1–600 months, and the holding period to 0–480 months. Very long or invented terms are what-if scenarios, not lender quotes. Once the loan is paid off, savings stop, and a move only matters if it closes out the loan. A break-even that falls after payoff can't be reached within these loans.
What goes in the cost field?
Net refinance costs you've confirmed and will cover with your own money, minus any lender credit you're able to apply. Leave out refundable escrow deposits and fees rolled into the loan, and count each cost a single time. An empty field means the amount is unknown rather than zero. Enter 0 only when you have confirmed that the net cash cost is truly zero; with a positive payment reduction, there is then nothing paid upfront to recover.
Is a positive result a sign to refinance?
No. The tool looks only at P&I cash flow, holding principal and term equal. It ignores differences in remaining debt and in equity. Taxes, discounting and other housing charges stay out too. The tool doesn't model term extensions, cash-out or loan approval either. Before deciding, get real quotes and the total borrowing cost from your lender.