Stay long enough
Break-even months are closing costs divided by monthly savings. If you will move before that month, the costs are not recovered by the payment cut.
The test assumes the savings continue. A later ARM adjustment, or a plan to pay the loan off immediately, changes it.
A no-savings result is still information
If the new rate is higher, the calculator will not invent a break-even. The refinance does not pay for itself through a lower payment.
People still refinance to remove a co-borrower or to change a term. Those reasons are not a monthly-savings math problem, and this site will not pretend they are.
| Result | Reading |
|---|---|
| Savings above zero | Look at break-even |
| Savings at or below zero | No payment break-even |
| Much longer term | Check total interest |
Calculators
Related guides
Sources
Common questions
Is a 1% rate drop always enough?
Not by itself. Costs and the new term decide whether the drop helps.
Should I refinance to combine debts?
That is a cash-out question. It raises the mortgage balance and puts housing collateral behind other debts. The basic refinance tool does not model it.