Calculate your mortgage refinance break-even point in 2026

The break‑even point is the number of months needed to recoup your refinance closing costs through the monthly payment savings. If you expect to stay in the home longer than that period, refinancing improves cash flow and reduces total interest expense.

The break-even formula

Months to break even = total closing costs ÷ monthly payment savings

• Total closing costs – all lender and third‑party fees paid at closing, excluding escrow deposits.
• Monthly payment savings – current principal‑and‑interest (P&I) payment minus the new P&I payment.

2026 benchmark table

*Freddie Mac’s 2025 national average closing‑cost range for a 30‑year fixed loan was $3,800‑$5,200; the figures above scale proportionally by loan size.

Breaking down closing‑cost components

1. Lender and origination fees – origination (0.5‑1 % of loan), underwriting, and any discount points you purchase to lower the APR.
2. Third‑party fees – appraisal, title search & insurance, recording, and credit‑report services.
3. Escrow deposits (excluded) – initial deposits for property taxes and homeowners insurance are not fees and should not be part of the break‑even numerator.

Including discount points raises the numerator but can shorten the break‑even horizon if the resulting rate reduction is large enough.