The division
Costs of $4,500 and savings of $150 are 30 months. The calculator rounds up, so a fraction of a month becomes a full month.
Costs in this model are added to the new loan, which slightly raises the new payment compared with paying costs in cash. That makes break-even a bit longer, which is the conservative direction.
What break-even does not include
It ignores tax deductions, the hassle of an application, and the chance you will move. It also ignores interest you pay after break-even.
A refinance can pass break-even and still cost more interest if the term was extended. Read the interest lines, not only the month count.
| Monthly savings | Break-even |
|---|---|
| Above zero | Costs divided by savings, rounded up |
| Zero or negative | Not shown |
Calculators
Related guides
Sources
Common questions
Why round up?
You have not recovered the cost until the full month of savings has happened. A partial month is not counted as done.
Do points have their own break-even?
Yes. The points calculator uses the same idea: upfront cost divided by monthly savings, and only when savings are positive.