When could a refinance
pay back its costs?
Estimate the simple payment-savings break-even point. Then look at the bigger picture before making a decision.
PAYMENT-SAVINGS BREAK-EVEN
Estimated time to recover the entered upfront costs.
- Monthly payment savings$300
- Annual payment savings$3,600
- Five-year payment savings, less costs$12,000
One useful calculation.
One part of the decision.
The break-even estimate divides upfront costs by the reduction in monthly payment and rounds up to the next whole month. Five-year payment savings equal 60 months of the entered payment difference minus the entered upfront costs. This is cash-flow arithmetic, not a total-interest or wealth comparison.
A lower payment can result from a longer repayment period and may increase total interest. This tool does not compare remaining principal balances, loan terms, tax effects, opportunity costs, financed fees or cash-out proceeds. It assumes the entered payments remain constant.
Ask for a complete comparison of your existing mortgage and proposed loan, including balance, remaining term, interest, closing costs and expected time in the home.
Read the refinance guide