Refinance break even
The only question that matters on a refinance: how long until the savings pay for the costs, and will you still own the home by then.
Show as a table
| After | Net savings |
|---|---|
| Year 1 | $2,290 |
| Year 2 | $11,080 |
| Year 3 | $19,870 |
| Year 4 | $28,660 |
| Year 5 | $37,450 |
| Year 6 | $46,240 |
| Year 7 | $55,030 |
| Year 8 | $63,820 |
| Year 9 | $72,610 |
| Year 10 | $81,400 |
Total interest from here
Restarting a 30 year clock has a cost even when the payment drops- Current loan
- New loan
Counting closing costs, this refinance saves $63,256 over the life of the loans.
Estimates only. Principal and interest only; taxes, insurance and escrow are excluded. Break even is the cost of the refinance divided by the monthly saving. Sample math for illustration, not a loan offer.
How to read this
Four things the break even number does not say on its own.
Break even under 30 months is usually a clear yes. Over 60 months it is usually a no, unless you are also shortening the term on purpose.
Restarting a 30 year clock has a real cost even when the payment drops. Compare a 20 or 25 year term before you decide.
An appraisal waiver saves roughly $900 on a refinance in this county and is common when equity is strong.
Your old escrow balance is refunded after closing, so the true out of pocket is lower than the closing statement suggests.
Taking cash out as well? See cash out refinance. Just lowering the payment? See rate and term refinance.
I will tell you when not to refinance
If the break even does not clear your plans, you will hear that instead of a pitch.
Sample figures across this site are illustrations, not quotes. Equal Housing Opportunity.