1. What is the Refinance Break-Even Calculator?

The Refinance Break-Even Calculator determines how many months it will take for your monthly savings to equal the closing costs of refinancing. This helps you decide whether refinancing makes financial sense for your situation.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Closing Costs — Total fees paid to refinance (USD)
• Monthly Savings — Reduction in monthly payment after refinancing (USD)

Explanation: The result shows how many months of savings are needed to recover your upfront refinancing costs.

3. Importance of Break-Even Calculation

Details: Calculating your break-even point helps determine if refinancing is worthwhile based on how long you plan to stay in the home. If you'll move before reaching break-even, refinancing may not be beneficial.

4. Using the Calculator

Tips: Enter your total closing costs and monthly payment reduction. Both values must be positive numbers. The calculator will show how many months until you break even.

5. Frequently Asked Questions (FAQ)

Q1: What should be included in closing costs?
A: Include all lender fees, appraisal fees, title insurance, and other refinancing charges.

Q2: How do I calculate my monthly savings?
A: Subtract your new monthly payment from your current monthly payment.

Q3: What is a good break-even period?
A: Typically, a break-even under 24 months is considered favorable, but this depends on your plans.

Q4: Does this account for interest rate differences?
A: Only indirectly - the monthly savings should reflect any interest rate change.

Q5: Should I consider other factors beyond break-even?
A: Yes, also consider total interest savings, loan term changes, and your long-term plans.