Quick Answer — How Do You Calculate a Refinance Break-Even?
Divide total closing costs by the monthly payment saving: Break-Even Months = (Closing Costs)/(Old Payment - New Payment). If you will still own the home past that date, the refinance pays for itself.
That headline number hides a trap, so this calculator also solves the refinance over your existing remaining term rather than a fresh 30 years. Comparing a 30-year new loan against a 27-year old one credits the term extension as a saving when it is really a deferral.
Worked example: a $310,000 balance at 7.125% with 324 months (27 years) remaining pays $2,157.55 a month. Refinancing to 6.125% over a fresh 30 years with $6,800 of closing costs gives a payment of $1,883.59 — a saving of $273.96 a month and a break-even of 24.8 months. Lifetime interest falls by $20,953.09 despite the three extra years.
Run the same refinance over the remaining 324 months instead and the payment is $1,958.62 — a saving of $198.94, a break-even of 34.2 months, and a lifetime interest reduction of $64,455.13, more than three times larger. Same rate, same costs, very different deal.
This calculator covers the entire closing-cost package on any loan type. If your question is narrower — whether to buy discount points inside a single loan — the mortgage points break-even calculator prices that one decision on its own.