What is the break-even point for a refinance?


The "break-even" point for a home mortgage refinance commonly means the point in time when the money you save by making lower payments each month balances the money you spend in closing costs for your new mortgage. For example, if a refinance home loan costs you $3,500 but saves you $70 per month, after 50 months you will have saved enough in mortgage payments to pay yourself back that $3,500 and "break even."

The true "break-even" point takes into account not only the lower payments, but also the total cost of the loan, including interest, amortized over the term of the loan. If you refinance into a longer term, you may pay more interest over the life of the loan, but a lower monthly payment can give you more financial flexibility when you need it most.

Using a refi to save money every month may be the right move for your budget. The lenders on RefinancingRight.com can help tailor a home refinancing to your situation.



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