Answers · Definitions
What is a refinance breakeven point?
Updated June 2026The breakeven point is the number of months until a refinance's savings repay its costs. Formula: closing costs ÷ monthly savings. $6,000 in costs ÷ $200/month saved = 30 months. Keep the loan longer than that and you win; sell or refinance again sooner and you lose.
Why it's the number that matters
Rate drops feel like instant wins, but a refinance starts thousands of dollars in the hole — appraisal, title, origination, recording. Every month afterward, your savings dig you out. The breakeven point is the month you reach the surface. Everything after it is profit; everything before it is prepayment.
What counts as good
| Breakeven | Verdict |
|---|---|
| Under 18 months | Strong — hard to lose unless you move almost immediately |
| 18–36 months | Reasonable if you're confident you'll stay |
| 36–60 months | Marginal — a lot can change in 3–5 years, including rates |
| Over 60 months | Usually a pass — the costs outweigh a thin rate gap |
Two subtleties the simple formula hides
- Term reset. Refinancing 26 remaining years into a fresh 30-year term lowers the payment partly by stretching the debt. Compare savings against the same remaining term — or look at a 25- or 20-year refi — for the honest number.
- "No-cost" refinances aren't. Lenders cover closing costs by charging a slightly higher rate. That converts your breakeven from a one-time cost into a permanent rate premium — fine if you'll move soon, expensive if you stay 20 years.
Compute yours in 20 seconds
Four sliders: balance, current rate, new rate, costs. The calculator does the rest — free, no signup.
Open the breakeven calculatorFigures are illustrative math, not a loan offer or financial advice. Actual rates and fees depend on qualification with lenders.