How Closing Costs Move Your Refinance Break-Even Month

Closing costs decide when a refinance starts paying you back. The monthly saving is set by the rate and term; the closing costs set how many months of that saving it takes to cover the fee. The Refinance Calculator shows that month, and this guide shows how far it moves when only the fees change.

The formula

Chase's refinance guide gives the break-even point as: "Break-even point = Total closing costs / monthly savings". Its own example: "divide $5,000 by $200. This equals 25 months." In the calculator the monthly saving is the current principal-and-interest payment minus the new one, so taxes, insurance and escrow are not part of it.

On what counts as a cost, the same guide says closing costs include "lender fees, an appraisal, title costs and other closing costs." Those amounts vary by lender and market, so the calculator takes them as an input you type in.

Worked example: one rate drop, four fee levels

Every input below is an illustrative assumption, not a market quote. Loan balance: $250,000. Current loan: 7.00% with 25 years remaining. New loan: 6.00% over 25 years, so the term is not reset and only the rate changes. Closing costs are paid separately, not rolled into the loan. The payments are computed with the standard amortization formula the calculator uses.

• Current principal-and-interest payment: $1,766.95
• New principal-and-interest payment: $1,610.75
• Monthly saving: $156.19

Closing costs	Break-even (costs ÷ $156.19)	Interest saved over the loan	Interest saved, net of closing costs
$3,000	about 19 months	$46,858	$43,858
$5,000	32 months	$46,858	$41,858
$7,500	48 months	$46,858	$39,358
$10,000	64 months	$46,858	$36,858

The rate, the payment and the monthly saving are identical in every row. The fee alone moves the break-even from about a year and a half to more than five years.

Reading the table

• The saving is the same, the wait is not. At $10,000 in costs the break-even is more than three times as long as at $3,000.
• Lifetime interest barely notices the fee. The interest saved is the same in every row; the fee only subtracts from it. A lifetime figure that is positive in all four rows says nothing about whether you will hold the loan long enough to reach break-even.
• Time in the loan is the deciding input. Chase's guide says: "If you might sell or move in a few years, you may not reach the break-even point." In this example, someone who sells after 30 months is still behind in the $5,000 row and in both rows below it.

What the example leaves out

The calculator compares principal and interest only. It does not model PMI, escrow changes or the tax treatment of mortgage interest. It also assumes costs are paid in cash rather than rolled into the balance, which would raise the new payment. To test a different case, enter your own balance, rates, remaining term and the closing costs on your lender's estimate.

Informational only, not professional advice. Last reviewed: October 2026.

Frequently asked questions

How do you calculate a refinance break-even point?

Divide total closing costs by the monthly saving. Chase's guide states it as "Break-even point = Total closing costs / monthly savings". With $5,000 in costs and a $156.19 monthly saving, as in the example above, the result is 32 months.

Does a bigger closing-cost bill change the monthly saving?

Not when the costs are paid separately. In the worked example the monthly saving stays at $156.19 in all four rows, and only the break-even changes. If the costs are rolled into the loan, the balance and the new payment both rise, which the calculator does not model.

What do refinance closing costs include?

Chase's guide lists "lender fees, an appraisal, title costs and other closing costs." The amounts depend on your lender and market, so the calculator asks you to enter the figure from your own loan estimate.

What if I sell before the break-even month?

Then the saving has not yet covered the fee. Chase's guide says: "If you might sell or move in a few years, you may not reach the break-even point." The calculator shows the month so you can compare it with how long you expect to hold the loan.