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Refinance Breakeven Point Calculator

This Refinance Breakeven Point Calculator helps you determine how many months it will take to recover refinancing costs based on your monthly savings.

Refinancing Payback Period Estimator

Input Fields
$
Enter your remaining loan balance
$
Enter your current monthly mortgage payment
%
Enter your current interest rate
%
Enter new interest rate for refinancing
years
Enter new loan term in years
Enter either percentage or fixed cost depending on the type

Refinance Break-even Point Formulas

Formula
\[ \text{New Payment} = \frac{P \times r}{1 – (1 + r)^{-n}} \] \[ \text{Closing Costs} = \begin{cases} P \times \frac{x}{100}, & \text{if expressed as a percentage} \\ \text{cash value}, & \text{if entered as fixed amount} \end{cases} \] \[ \text{Months to Breakeven} = \frac{\text{Closing Costs}}{\text{Monthly Savings}} \]

Where:

  • $$P$$ = Loan principal
  • $$r$$ = Monthly interest rate
  • $$n$$ = Number of months
  • $$x$$ = Closing cost percentage (if applicable)
  • $$Monthly Savings$$ = Old monthly payment – New monthly payment
  • $$Months to Breakeven$$ = Time required to recover refinancing costs


Refinance Break-even Point – Calculation Example

Suppose:

  • Old payment = $1,500
  • New payment = $1,300
  • Monthly savings = $200
  • Closing costs = $3,600

Calculation:

  1. $$\text{Months to Breakeven} = \frac{3,600}{200} = 18$$

So, you’ll recover your refinancing costs in 18 months.

The Refinance Breakeven Point Calculator helps homeowners decide whether refinancing makes financial sense. By comparing closing costs to monthly savings, it estimates how long it will take to recoup the investment in refinancing. It supports both fixed and percentage-based cost inputs.

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