Refinance Break-Even Calculator 2026
Find out exactly how many months it takes to recoup the closing costs of a mortgage refinance. If you might sell or refinance again before that month, you lose money on the deal.
Last updated April 2026 · Sources: Freddie Mac PMMS, ClosingCorp, MBA Refinance Application Survey
Your refi numbers
Your result
When refinancing makes sense (and when it doesn't)
The break-even month is the single most important number in the refi decision. Here's how to interpret your result against your plans.
| Plan to stay in home | Break-even under 24 mo | 24-48 mo | Over 48 mo |
|---|---|---|---|
| Less than 3 years | Worth it | Marginal | Skip |
| 3-5 years | Worth it | Worth it | Marginal |
| 5+ years | Worth it | Worth it | Worth it |
Frequently Asked Questions
What is the break-even point on a refinance?
The break-even point is the number of months you need to keep the new mortgage for the cumulative monthly savings to equal what you paid in closing costs. The formula is closing costs divided by monthly savings. On a $300,000 loan refinancing from 7.5% to 6.46% with $5,000 in closing costs, you save about $209/month and break even in roughly 24 months — meaning if you sell or refinance again before month 24, you lose money on the deal.
Is refinancing worth it for a 1% rate drop?
It depends entirely on how long you'll keep the loan. The old "1% rule" is outdated. Run the numbers: a 1% drop on a $300,000 loan saves about $200/month, which recoups $5,000 in closing costs in 25 months. If you'll stay 5+ years past that point, it's usually a clear win. If you might move within 3 years, even a 1% drop probably won't pay off.
What counts as closing costs on a refinance?
Origination fees (typically 0.5%-1% of the loan), appraisal ($500-700), title insurance (lender's policy is usually required, $400-1,500), recording fees ($125 average), credit report ($25-100), and prepaid interest. You don't pay owner's title insurance again on a refinance because you're still the owner. Total refinance closing costs typically run 2%-3% of the loan amount, lower than purchase closing costs.
Should I include the cost to "buy down" my rate?
Yes — discount points are part of closing costs. One point equals 1% of the loan amount and typically lowers your rate by about 0.25%. Whether they're worth it depends on how long you'll keep the loan. The rough rule: if you break even on the points themselves within 5 years, they're worth it on a 30-year loan you plan to keep. Use the calculator to test scenarios with and without points.
What about a no-closing-cost refinance?
No-closing-cost refis trade lower upfront fees for a higher interest rate (typically 0.25%-0.50% higher) or roll the costs into your loan balance. The break-even math still applies — you're just paying the costs over time instead of upfront. For short holding periods (under 3 years), no-cost refis often win. For long holding periods, paying costs upfront for a lower rate usually wins.
Does the refinance reset my loan term?
Yes, by default. If you refinance a 25-year-remaining loan into a new 30-year, you just added 5 years of payments. Even with a lower rate, the total interest paid can sometimes increase. To avoid this, refinance into a shorter term (15-year or 20-year) or keep paying your old monthly amount on the new loan, which acts as a built-in extra principal payment.
How much does my credit score matter for a refinance rate?
A lot. Borrowers with 760+ FICO scores typically qualify for the lowest advertised rates. Each 20-point drop below that band adds roughly 0.125%-0.375% to your rate. On a $300,000 loan, going from 760 to 680 might cost you an extra 0.50%, which works out to about $100/month and $36,000 over 30 years. Pull your credit before applying and dispute any errors first.
When does cash-out refinancing make sense?
Cash-out refis pull equity out as cash by increasing your loan balance. They make the most sense when you're using the funds for high-return purposes: paying off credit card debt at 20.97% APR, funding a home addition that adds value, or consolidating other high-interest debt. They're a poor choice for funding lifestyle spending or investments, since you're trading a tax-advantaged secured loan for risk that could leave you underwater.
Can I refinance if my home value dropped?
It's harder but possible. Conventional refis usually need at least 80% LTV (20% equity). FHA Streamline and VA IRRRL programs allow refinancing with little or no equity check if your existing loan is FHA or VA. These streamline programs skip the appraisal entirely in many cases, which is a significant cost savings. Talk to a lender that specializes in these programs.
How long does a refinance take in 2026?
Currently 30-45 days from application to closing for a typical conventional refi, similar to a purchase loan. Streamline refinances (FHA, VA) can close in 2-3 weeks because they skip income re-verification and appraisal. Lock your rate when you apply — rate locks typically run 30, 45, or 60 days, and longer locks cost more. If your closing slips past the lock expiration, you may pay an extension fee or get re-quoted at current rates.
Should I refinance to remove PMI?
Often yes. If your home has appreciated and you now have 20% equity, refinancing into a conventional loan kills PMI permanently. On a $300,000 home that started with 5% down, eliminating $200/month in PMI is roughly $2,400 per year — enough to justify $5,000 in closing costs in about 25 months even before counting any rate savings. FHA borrowers in particular benefit because FHA mortgage insurance lasts the life of the loan if you put less than 10% down.
Is now a good time to refinance in 2026?
For borrowers who closed in 2023 or 2024 at rates above 7%, today's 6.46% can produce real savings. For anyone who locked in 3-4% rates in 2020-2021, refinancing makes no sense and the lock-in effect is keeping inventory tight. The general framework: refinance only if your new rate is at least 0.75-1% lower than your current rate, you'll keep the home past the break-even point, and you have the cash to cover closing costs without draining your emergency fund.
Sources: Freddie Mac Primary Mortgage Market Survey (April 2 2026), ClosingCorp 2025 closing cost study, MBA Weekly Mortgage Applications Survey, CFPB rate lock guidance.
Disclaimer: Estimates only. Actual closing costs and rate offers vary by lender, location, credit profile, and loan type. Always compare Loan Estimates from at least three lenders.