Refinance Break-Even
Should you refinance the mortgage?
The break-even is the month where cumulative monthly savings catch up to your closing costs. Beyond that month, every dollar saved is real.
Built and reviewed by LeadAfrik Research
Data-grounded analysis on African economies
Current loan
What you have now
New loan
What you'd refinance into
Verdict
$ 306 saved per month.
Fast break-even (2y 2m) — likely worth doing.
Break-even depends only on closing costs and monthly savings. Lifetime savings depend on how long you keep the loan — short-term moves rarely justify the closing costs.
Result
Side-by-side
Current monthly
$ 2,253
New monthly
$ 1,947
Monthly savings
$ 306
Break-even
2y 2m
Lifetime interest (current)
$ 410.1K
Lifetime interest (new + closing)
$ 318.9K
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Common questions
Should I refinance?
Refinance if your break-even (closing costs ÷ monthly savings) is shorter than how long you'll keep the house. The classic rule-of-thumb is 'at least 0.75% rate drop' — but the actual answer depends on the loan size and closing costs.
What are typical closing costs?
Usually 2–5% of the loan amount. On a $400k refinance, expect $8–20k. Some lenders offer 'no-closing-cost' refis where the costs are baked into a slightly higher rate — the tool can model that by setting closing costs to 0 and adjusting the new rate up.
Does refinancing reset my term?
It typically resets to a new 15- or 30-year clock, which means more total interest paid even at a lower rate. Refinancing into the same remaining term (e.g., from 25 years left to a new 25-year loan) keeps the comparison fair.
What about cash-out refinancing?
Same break-even logic, but you pull equity out — so you owe more. Compare the cash-out rate to alternatives (HELOC, securities-backed loan). The calculator above models a rate-and-term refi only.