A lower interest rate still loses if closing costs (including discount points and origination) take longer to earn back than you will keep the loan. Dollar figures on education pages are worked examples for illustration. They are not your payment, cash to close, or an offer of credit. Snapshot as of 2026-08.
The reusable table
Break-even months ≈ cash costs ÷ monthly P&I savings. Same table on the refinance hub, the recast comparison, and the refinance calculator.
| Question | Modest costs | Costs include a point | Thin monthly savings |
|---|---|---|---|
| Illustrated cash costs | $3,000 | $6,000 | $4,000 |
| Illustrated monthly P&I savings | $200 | $150 | $50 |
| Break-even months | 15 months | 40 months | 80 months |
| If you move or refinance again in 24 months | About 15 months. In this illustration, a 24-month stay earns the costs back. | About 40 months. In this illustration, a 24-month stay does not earn the costs back. | About 80 months. In this illustration, a 24-month stay does not earn the costs back. |
Break-even months ≈ cash costs ÷ monthly principal-and-interest savings. Cash costs include appraisal, title, recording, prepaid interest, origination, and discount points, minus lender credits. Use old P&I minus new P&I. Do not treat a tax, insurance, or HOA change as “savings.” Dollar figures on education pages are worked examples for illustration. They are not your payment, cash to close, or an offer of credit.
- Numerator. Appraisal, title, recording, prepaid interest, origination, and discount points. Subtract lender credits.
- Denominator. Old P&I minus new P&I. Do not treat a tax-and-insurance change as “savings.”
Illustration: $6,000 in costs (including one point) and $150 less P&I is 40 months — the middle column. Taxes, opportunity cost of cash, and a shorter remaining term can change the story — that is a loan-officer model, not this paragraph. Recast instead of refinancing: recast vs refinance.
When people still refinance anyway
- Removing a risky ARM reset, even if break-even is long.
- Changing term (for example, 30 to 15) for a payoff goal, not a payment cut.
- Cash-out needs — then compare a HELOC instead of assuming cash-out is cheaper.
What happens next
Put points and origination into the refinance calculator, then compare two Loan Estimates. FHA-to-FHA or VA-to-VA with a shorter doc list is a different product: streamline refinance. Program hub: refinance. Why the news average is not your quote: rates hub.
Common questions
Keep going
What to do next
Education first. A conversation with a loan officer is how you find out what may actually fit your file.
Loan information is provided by Ondo Real Estate (NMLS ID on file). This is not a commitment to lend, a loan approval, or an offer of credit. Rates, terms, and payments shown are estimates for illustration only, are not a quote, and are subject to credit approval, underwriting, and market conditions. You are not required to use Ondo for financing to buy or sell with Ondo. Equal Housing Lender. Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision. Licensing and disclosures