# How to calculate break even point refinance

Learn how to calculate the break even point when refinancing your mortgage. Discover the steps to take to ensure that refinancing is worth it.

## How to Calculate Break Even Point Refinance

Refinancing your mortgage can be a smart financial move if it saves you money in the long run. However, before you jump in, it’s important to understand the concept of break even point and how to calculate it. Break even point is the amount of time it takes for the savings from refinancing to offset the costs. In other words, it’s the amount of time it takes for you to break even and start seeing actual savings.

Here’s how to calculate the break even point when refinancing your mortgage:

### Step 1: Understand the concept of break even point.

The break even point is the amount of time it takes for the savings from refinancing to offset the costs. You should aim to refinance if you can break even before you plan to sell your home.

### Step 2: Review your current mortgage.

First, review your current mortgage to determine the interest rate, monthly payment, and remaining balance. This will help you determine whether refinancing is worth it.

### Step 3: Get quotes for refinancing.

Next, get quotes from a few different lenders to compare. Make sure to ask for quotes with the same loan terms (e.g., 30 years) and loan type (e.g., fixed-rate).

### Step 4: Determine your new monthly payment.

With the quotes you received, determine your new monthly payment. This will help you see how much you’ll save each month by refinancing.

### Step 5: Calculate your total costs to refinance.

Calculate the total costs to refinance, including closing costs, appraisal fees, and any other fees associated with the new loan.

### Step 6: Subtract your new monthly payment from your old monthly payment.

Subtract your new monthly payment from your old monthly payment to see how much you’ll save each month.

### Step 7: Divide your total closing costs by your monthly savings.

Divide your total closing costs by your monthly savings to determine the number of months it will take to break even.

### Step 8: This calculation will give you the number of months it will take to break even.

If the break even point is longer than the time you plan to stay in your home, refinancing may not be worth it.

### Step 9: Consider how long you plan to stay in your home.

If you plan to stay in your home longer than the break even point, refinancing may be worth it.

### Step 10: If you plan to move before the break even point, refinancing may not be beneficial.

If you plan to move before the break even point, refinancing may not be beneficial.

### Step 11: Factor in any other financial goals or considerations.

Consider any other financial goals or considerations you have before making a decision.

### Step 12: Work with a mortgage professional to explore your options.

Work with a mortgage professional to explore your options and get advice on what’s best for your situation.

### Step 13: Compare different loan terms and interest rates.

Compare different loan terms and interest rates to find the best deal for you.

### Step 14: Be aware of any fees associated with refinancing.

Be aware of any fees associated with refinancing and make sure to factor them into your calculations.

### Step 15: Consider the impact on your credit score.

Consider the impact on your credit score before making a decision to refinance.

### Step 16: Make a decision based on your individual circumstances.

Make a decision based on your individual circumstances and what’s best for your financial situation.

### Step 17: Monitor interest rates to see if refinancing becomes a better option in the future.

Monitor interest rates to see if refinancing becomes a better option in the future.

### Step 18: Don’t rush into a decision.

Don’t rush into a decision and take your time to make sure you’re making the best choice.

### Step 20: Conclusion

Calculating the break even point when refinancing your mortgage is an important step in determining whether it’s worth it. By following these steps and working with a mortgage professional, you can make an informed decision that’s best for you and your financial situation.

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