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A practical mortgage refinance break-even scenario
For this example, use current monthly payment of 2,200, new monthly payment of 1,980, and refinancing costs of 5,200. These are starting values, so replace them with numbers that match your situation.
Current monthly payment: 25% lower
Change current monthly payment to 1,650 while keeping the other example values the same.
Current monthly payment: 25% higher
Change current monthly payment to 2,750 while keeping the other example values the same.
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Quick answer
What does the Mortgage refinance break-even calculate?
How long will monthly savings take to recover refinancing costs? This calculator uses current monthly payment, new monthly payment, and refinancing costs to estimate months to recover refinancing costs immediately in your browser.
With the values currently entered, the result is 24 months — to recover refinancing costs. It also shows monthly saving, and five-year saving after costs.
How to use the Mortgage refinance break-even
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Current monthly payment
- New monthly payment
- Refinancing costs
Mortgage refinance break-even formula
Refinancing costs ÷ monthly payment saving
Assumptions
- Compared payments cover the same cost components.
- Loan balance changes and tax effects are excluded.
Practical guide
Mortgage refinance break-even example and edge cases
How long will monthly savings take to recover refinancing costs? Let's use a concrete example, then look at the assumptions that can move the answer.
Example: A practical mortgage refinance break-even scenario
For this example, use current monthly payment of 2,200, new monthly payment of 1,980, and refinancing costs of 5,200. These are starting values, so replace them with numbers that match your situation.
- Current monthly payment
- 2,200
- New monthly payment
- 1,980
- Refinancing costs
- 5,200
Calculated result24 monthsto recover refinancing costs
Start with to recover refinancing costs. Then check monthly saving, and five-year saving after costs to understand what sits behind the main result.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the main result first. The supporting figures for monthly saving, and five-year saving after costs explain how the estimate is built.
- The method is Refinancing costs ÷ monthly payment saving. Keep the units consistent and use values from the same time period.
Edge cases worth checking
When current monthly payment is unusual
Compared payments cover the same cost components. Double-check this input before relying on the result.
When refinancing costs is uncertain
Loan balance changes and tax effects are excluded. Run a lower and higher value to see a useful range.
What changes the result most
Current monthly payment
Use a current amount for current monthly payment. Include fees or recurring costs that belong in the same figure.
New monthly payment
Use a current amount for new monthly payment. Include fees or recurring costs that belong in the same figure.
Refinancing costs
Use a current amount for refinancing costs. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Current monthly payment: 25% lower
1,650No break-evennew payment is not lower
Current monthly payment: 25% higher
2,7507 monthsto recover refinancing costs
New monthly payment: 25% higher
2,475No break-evennew payment is not lower
Common mistakes
Check current monthly payment
Compared payments cover the same cost components. Make sure this matches the number you enter.
Keep refinancing costs consistent
Loan balance changes and tax effects are excluded. Use the same units and time period throughout the calculation.
Do not rely on one mortgage refinance break-even scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
How long will monthly savings take to recover refinancing costs?
It cannot replace a lender quote, lease, survey, or purchase contract.