Refinance planning
When could payment savings cover refinance costs?
A simple break-even estimate compares the cost of refinancing with expected monthly savings. The calculation should also consider how long the borrower expects to keep the loan, changes to the loan term, cash received, and total interest over time.
Illustrative break-even
20 monthsUse comparable payment components in both amounts. Costs financed into the new loan, prepaid items, taxes, term changes, and total interest need separate review.Refinance Break-Even Basics
A simple break-even estimate compares the cost of refinancing with expected monthly savings. The calculation should also consider how long the borrower expects to keep the loan, changes to the loan term, cash received, and total interest over time.
Educational only. Current guidelines, costs, and pricing vary. This page is not a rate quote or approval.
Method: refinance costs divided by monthly payment reduction, rounded up to a whole month. Background: Federal Reserve refinancing guide (archived educational reference).