Testing a refinance against time: breakeven, term resets and total cost
Comparing two refinance offers
On the bench
For each offer, take the total closing costs and the monthly savings, and find the breakeven month. Then compare the total cost of each over the time you expect to keep the loan. The offer with the lower total over your stay usually wins, even if its breakeven is later.
Last reviewed against the primary sources listed below.
Use the same inputs
- Same loan amount and term.
- Same lock length.
- Costs from section D of each Loan Estimate.
Breakeven questions
Which refinance offer is better?
Usually the one with the lower total cost over the time you will keep the loan.
Is a shorter breakeven always better?
No; total cost over your stay matters more.