Understand the simple break-even formula
A basic break-even estimate divides net closing costs by monthly payment savings. For example, $4,800 of costs divided by $160 of monthly savings gives 30 months.
Add the costs a simple formula can miss
A new loan can restart amortization and extend the payoff date. Compare interest over the period you expect to keep the loan, cash paid at closing, points, and any balance added to the new loan.
- Closing costs and points
- Change in monthly principal and interest
- Change in mortgage insurance
- New payoff date
- Opportunity cost of cash paid upfront
Run three holding-period scenarios
Test an early move, your expected move, and a longer stay. Refinancing is more resilient when it remains favorable across more than one reasonable scenario.
Test your scenario
Use the related calculators
The guide frames the comparison; the calculators let you enter your own numbers and test alternatives.