How to Calculate Refinance Break-Even
Calculate your new payment after a mortgage refinance, the monthly savings, the break-even month where savings repay the closing costs, and your true lifetime savings after the new loan's interest.
The Formula
breakEvenMonths = closingCosts / (currentPayment - newPayment); monthsRemaining = log(payment / (payment - balance * rate / 1200)) / log(1 + rate / 1200)The refinance break-even formula uses the mathematical relationship: breakEvenMonths = closingCosts / (currentPayment - newPayment); monthsRemaining = log(payment / (payment - balance * rat. Each variable in the formula represents a measurable quantity that affects the final result.
Step-by-Step Method
- 1Identify all input values needed for the refinance break-even calculation.
- 2Substitute your known values into the formula: breakEvenMonths = closingCosts / (currentPayment - newPaymen.
- 3Perform the arithmetic operations in the correct order (PEMDAS/BODMAS).
- 4Check that your result has the correct units and is within a reasonable range.
- 5Verify using the interactive Refinance Break-Even Calculator to confirm your answer.
Related Topics
refinance break evenmortgage refinancebreak even pointclosing costsrefi savings
Use the Interactive Calculator
Skip the manual math — get instant results with our free Refinance Break-Even calculator.