By Michael DuBois · Published 2026-10-04 · Last updated 2026-10-04
What is the basic calculation?
Divide the costs of the new loan that you will not recover by the estimated monthly savings on comparable payments. For example, a hypothetical $3,000 in relevant upfront costs and $100 a month in savings would suggest 30 months to break even. This arithmetic example is not a rate, fee quote or promise of savings.
What can make the simple calculation misleading?
A new loan term can extend interest payments even if the monthly amount falls. Changes to taxes, insurance, mortgage insurance or escrow can disguise what the loan itself saves. Ask how a lender credit or costs added to the new balance change the long-run amount paid.
How do you use break-even in a decision?
Compare how long you expect to hold the mortgage, your current remaining term, the new payoff schedule and both Loan Estimates. If your goal is PMI removal, check the current servicer's cancellation rules before refinancing solely for that reason.
Sources and next steps
Read the related loan option, or bring your own numbers to a conversation with Michael.